byOmono Okonkwo

Article Summary

• African crude imports to India have reached a 22-year low, with India’s oil imports from Russia reaching a record high in April, reducing the share of Middle Eastern and African grades.
• India became Russia’s largest buyer of seaborne crude in December 2022, with imports of around 1.22 million barrels per day. Since December, inbound shipments have been consistently over 1.22 million barrels per day.
• Nigeria, previously India’s top crude importer, may see reduced crude oil export earnings as India focuses on cheaper Russian crude, posing a risk to Nigeria’s foreign exchange revenues.

African crude imports to India have reached their lowest level in 22 years. Reuters reports that India’s oil imports from Russia rose to a fresh record high in April, further reducing the share of Middle Eastern and African grades to their lowest level in at least 22 years.

According to reports, India has been predominantly importing crude, mostly from Russia, while ignoring crude markets in West Africa and the Middle East. India imported about 1.9 million barrels per day (bpd) of Russian oil in April, which accounts for about two-fifths of the country’s overall purchases.

Why Russian crude?

Russia has remained the top oil supplier to India for the sixth straight month in April. This is because India is getting Russian oil at very low prices.

According to energy intelligence firm Vortexa, India became Russia’s largest buyer of seaborne crude in December 2022, with imports of around 1.22 million barrels per day.

Since December, inbound shipments have been consistently over 1.22 million barrels per day. Meanwhile, private refiners such as Reliance Industries and Nayara Energy accounted for almost 46% of the total imports from Russia.

Impact on Nigeria’s crude

India has been Nigeria’s top crude importer; however, the former’s preference for Russian crude oil could reduce the country’s crude oil export earnings from India. In its December 2022 Foreign Trade report, the National Bureau of Statistics (NBS) stated that crude oil exports fell by 21.2% to N4.66 trillion in Q3 2022 from N5.91 trillion recorded in Q2 2022.

But prior to that, the third wave of the coronavirus pandemic experienced in India in April 2021, impacted Nigeria’s crude oil exports to India. At that time, India reduced crude oil imports by $39.5 billion.

Currently, Nigeria is still exporting to India, however, the latter imports crude from Russia, and being Nigeria’s largest crude importer in the last couple of years, this focus on cheap crude from Russia poses a risk to Nigeria’s foreign exchange revenues.

What you should know

Hindu Business Line reports that the Vice President & Co-Group Head of Corporate Ratings at India’s credit rating agency, ICRA Limited, Prashant Vasisht, said Indian imports of Russian crude oil have increased substantially now as opposed to earlier years due to the discount on landed cost basis.

Vasisht believes India would continue to maximize imports of Russian crude going forward as well. Note that the discounts on Russian crude are in the range of $10-15 per barrel. He said: