India is now buying almost 50 per cent of its imported crude oil from Russia and the amounts purchased are shooting up to new record levels every month.

But India’s Russian oil imports could be jeopardised by rising prices which will force us to pay more than the $60 per barrel that’s allowed under the Western sanctions regime. India has agreed to abide by the $60-dollar price cap placed by the G7 countries on Russian oil in the wake of the Ukraine-Russia war.

If prices go far above the $60-mark Russian crude may have to be brought here in what’s called the “shadow fleet” of anywhere between 100 and 500 ships that have been assembled by Russia over the last one year. However, many Indian banks which have international offices and clients may be forced to stay out of such transactions for fear of facing international sanctions. India has been getting a roughly $10 discount on its oil purchases from Russia.

India’s March crude oil purchases from Russia have cross 2.1 million barrels per day (bpd) level for the first time ever. In February India bought about 1.9 million bpd and in January we bought 1.6 million bpd. This was the first time we have crossed the 2 million bpd. Says Viktor Katona, lead crude analyst at data analytics company Kpler: “In February 2022 India didn’t buy oil from Russia. Within one year, basically, it went from zero to half of India’s supply.” He adds: “When India bought 1 million bpd people said they can’t buy much more.”

In January India got about 25 per cent of its crude oil imports from Russian and that climbed to 35 per cent in February. That has shot up steeply again in March.

On April 2 the oil producers decided to make sharp production cutbacks and that has resulted in oil moving up from a low of $67 a barrel to around $84 currently.

India was initially buying mostly Urals grade oil, which is produced in huge quantities and under normal circumstances is mostly sold in European markets. Now we are buying other grades including ESPO and Arctic which is found in Russia’s colder regions. China has traditionally bought most of the ESPO grade oil and some of that is now being diverted to the Indian market.

Some of the oil loaded in March is still on the 30-day voyage to this country and will arrive in April and even May.

India has traditionally bought most of its crude oil from the Gulf countries. Till last year Saudi Arabia was our biggest supplier followed by Iraq. In the wake of the Russia-Ukraine war, the Iraqis have markets in Europe but they are unhappy about being squeezed out of the Indian market.

India’s oil purchases from Iraq have fallen from the 900,000 bpd to around 600,000 bpd. India and Iraq are natural buyers and sellers because of the proximity of the two countries. It’s only about five-six days sailing time from Iraq to India compared to the long 30 or so days from Russia.