According to reports, the purchase of Russian oil at a discounted price has benefited India to the tune of 35,000 crores. This comes after India began purchasing Russian crude at a discount since the commencement of the Russia-Ukraine war.
After the Ukraine War forced Moscow’s usual buyers to forsake large quantities of oil, forcing Russian oil companies to offer significant discounts to new buyers, India started looking for cheap Russian oil. India chose to buy oil from Russia in defiance of intense pressure from Western countries.
In July, Russia overtook Saudi Arabia as India’s second-largest oil supplier as a result of its purchases of crude, a report in the Times of India states. However, the latter quickly reclaimed its former position, and now Russia is the third-largest oil supplier, according to trade figures cited by Reuters. India is now the second largest buyer of Russian oil after China.
Even Indian foreign minister, S. Jaishankar, backed the move, calling it the “best deal” for the country. Previously, he stated that India and other nations should be free to guarantee that the impact of war on their economy is minimal.
During the months of April and July, India bought $11.2 billion worth of mineral oil from Russia. According to figures from the Commerce Department, the figure has increased eightfold since it was $1. 3 billion in the same period the previous year. Since March, when India increased its imports from Russia, imports have surpassed $12 billion, up from a little over $1 billion last year.
It is pertinent to note that, refiners, not the government, procure oil; yet, cheaper oil has a favourable influence on macroeconomic aspects of the economy. Oil purchased at a reduced cost helps to keep expenses down and the current account deficit in line by lowering import bills and reducing currency demand.
Notably, this is the second time that searching for lower prices in the global oil market has saved India funds. Previously, we were able to mobilize Rs 25,000 crore in 2020 when oil prices plummeted due to the pandemic. The Indian government then replenished strategic stocks, while refiners stored oil aboard ships.
The Indian government has clarified on several global platforms that they will prioritise the need of the country and will buy oil wherever it is available.
