India’s role in the world has changed after the Ukraine war. In Russia- Y 2022, after China, India was second in terms of buying crude oil. Now after a year, India has left Saudi Arabia behind in the matter of selling oil to Europe. India is exporting more than 3.5 lakh barrels i.e. about 55 million liters of oil to Europe daily.
India used to buy 60% of crude oil from Arab countries
On 24 February 2022, the war between Russia and Ukraine started. Due to this, in March 2022, the price of crude oil increased to $ 140 per barrel. Then America announced to open its crude treasury to reduce the price of oil in the international market. At that time India used to buy 60% of its crude oil requirement from Gulf countries and only 2% crude oil used to come from Russia.
In 2021 India bought maximum crude oil from these regions
- Middle East: 52.7%
- Africa: 15%
- United States: 14%
Top 5 countries from where India bought maximum crude oil
- Iraq
- United States of America
- Nigeria
- Saudi Arabia
- United Arab Emirates.
America and Europe imposed restrictions on buying oil from Russia
In March 2022, America and Europe banned the purchase of oil from Russia, but India did not pay attention to these restrictions. From April 2022, Russia started selling oil to India at a lower price than the international market.
In the entire year of 2021-22, India bought crude oil worth Rs 18 thousand crore from Russia, while in the first 6 months of 2022-23, India bought crude oil worth Rs 89 thousand crore from Russia.
America and European countries also created pressure for India not being able to buy oil from Russia. G-7, an organization of powerful countries of the world, put a price cap on buying oil from Russia. Despite this, India kept buying oil.
“Import of crude oil from Russia to India increased by 386% over last year”
India refined by taking crude oil from Russia, then sold to Europe
Due to the sanctions imposed on Russia, European countries stopped buying oil from it. Because of this there was a shortage of oil in Europe. Due to this, western countries turned to other countries to meet their needs. India took advantage of this very well. According to ‘The Center for Research on Energy and Clean Air’, after April 2022, European countries have drastically increased the purchase of oil from China and India.
Overall, India sent more refined oil to Europe than Saudi Arabia sold to Europe during this period.
Before the war started, Europe used to buy 1.54 lakh barrels of refined oil daily from India. After the start of the war, this figure increased to 2 lakh barrels per day and in May 2023 to 3.60 lakh barrels per day.
How did India become such a big exporter that buys oil itself ?
Countries like India and China buy crude oil from other countries and refine it. Oil refining in India is very cheap. Big companies like Reliance, BPCL and IOCL do the work of oil refining.
Countries like China, India, Singapore and UAE are called ‘Laundromat Countries’. ‘Laundromat’ means washing machine, that is, countries that clean the dirt of oil. Oil imports from Russia to China, India, Singapore, UAE and Turkey have increased by 140% since the sanctions were imposed.
How is India benefiting by selling oil to Europe?
Vice President, Commodities, IIFL Securities believes that India is among the largest oil refining countries in the world. At present, India is taking advantage in 3 ways by selling oil to European countries.
- India’s refinery capacity is more than its domestic demand. In such a situation, Indian refinery companies are earning huge profits by selling oil to Europe.
- India does not have the capacity to reserve oil for more than a month. In such a situation, Indian refineries are forced to supply more crude oil to Europe, which is getting more from Russia, due to which the profits are also increasing.
- The refining margin of Indian companies has also increased due to availability of crude oil at a lower price.
Also read: Concern of foreign companies doing business in China increased
costly proposition for India to buy oil from Russia despite the low price
Russia produces more than 10.7 million barrels of crude oil every day. Before February 2022, more than half of this quantity used to go to Europe.
In such a situation, the biggest question is that when Russia used to meet half of Europe’s oil and gas needs by 2022, then why did India buy only 2% oil from its most important partner Russia.
Energy expert explains that the answer lies in the geography of Russia. It is difficult for India to buy oil from Russia because of three reasons.
- Where crude oil is produced in Russia, they are a little far from the Eastern region. Bringing oil from there is an expensive deal.
- The northern areas are near the arctic region. In such a situation, snow remains frozen here most of the time, due to which there is a problem in bringing oil to India.
- The third way to bring oil from Russia to India is through the Black Sea, which is closed after Russia’s attack on Ukraine.
Russia’s largest oil company Rosneft has its own refinery in Jamnagar, Gujarat. Before February 2022, Rosneft company also used to buy only 2% oil in India. Overall, India takes less oil from Russia because it is easier to bring it from other places.
Crude oil can be brought to India from Gulf countries by sea route in just three days. Apart from this, the fare in transport is also less.