The burgeoning trajectory of India’s oil demand growth mirrors the evolving landscape of global energy consumption. According to projections by the Organization of Petroleum Exporting Countries (OPEC), India’s oil demand is expected to reach 5.59 million barrels per day (b/d) in 2024, marking a marginal increase from 5.37 million b/d in the previous year.
In January 2024, India witnessed a significant surge in oil imports, with inbound shipments soaring to 5.33 million b/d, a notable escalation from 4.65 million b/d recorded in December 2023. Amidst this surge, Russia continues to play a pivotal role in India’s oil imports, accounting for over 35 percent of the total crude imports in 2023, equivalent to 1.7 million b/d, as reported by S&P Global.
Despite facing sanctions and a subsequent decline in oil imports from Russia for the second consecutive month in January 2024, Russia maintains its status as India’s top supplier. However, imports from Russia witnessed a decline, with data from LSEG indicating a 4.2 percent decrease to 1.3 million b/d, while Vortexa’s figures showed a more significant drop of 9 percent to 1.2 million b/d. This decline notably affected the supply of the light sweet Sokol grade.
The allure of Russian crude to Indian refiners persists, even amidst tightening sanctions, exacerbated by escalating tanker premiums due to Houthi attacks in the Red Sea region. These disruptions have reverberated across global shipping and supply chains, impacting commodity and crude oil prices. The significance of the Suez Canal as a vital maritime route cannot be understated, with data from Kpler indicating that 10-12 percent of worldwide crude exports and 14-15 percent of oil product exports transit through the Red Sea.
Furthermore, the United Nations Conference on Trade and Development (UNCTAD) reports a profound impact on liquefied natural gas (LNG) carriers, which have ceased operations entirely since January 16, 2024. Against this backdrop, the establishment of a new trade route between Russia and India holds immense potential to bolster bilateral trade and strategic cooperation, providing both nations with an alternative avenue amidst disruptions in traditional maritime routes.
MENAFN
