India has managed to reduce its oil spending in recent months, even though it’s been buying more crude oil from abroad. How is this possible? The answer lies in falling global crude oil prices.
Between September and November, India’s oil import costs dropped by 9% compared to the same period last year, totaling $31.2 billion. At the same time, the amount of oil imported increased by 4.4%, reaching 57.2 million tonnes, according to the Petroleum Ministry’s data.
A Surprising Shift in Trends
This trend marks a big change from the first five months of the financial year (April to August), when India was spending 14.2% more on oil imports than the previous year, even though the volume of imports grew only slightly by 2.6%.
So, what changed? The drop in oil prices globally has been a game-changer. In November alone, the cost of imports fell by 13% compared to the same month last year. Similar trends were seen in October (10.9% drop) and September (2.8% drop).
However, the demand for oil in India continues to grow. The country imported more oil in November (up 2.7%), October (up 4.3%), and September (up 6.3%) compared to the same months in 2022. This shows that India is taking advantage of lower prices to meet its rising energy needs.
Russia Becomes India’s Biggest Oil Partner
A key player in this story is Russia. Over the past year, Russia has become India’s largest oil supplier, making up 40% of the country’s crude imports. India is now working to finalize a long-term deal with Russia to secure stable oil supplies starting next year.
In fact, India’s biggest private oil refiner, Reliance Industries, recently signed a massive agreement with Russia’s state energy company, Rosneft. Starting in January, Reliance will receive nearly 500,000 barrels of Russian crude oil every day for its refinery in Jamnagar, Gujarat. The deal, valued at $13 billion annually, is the largest energy partnership ever between India and Russia.
What This Means for India
With falling oil prices, India is saving billions on imports while securing long-term energy supplies. This is good news for the Indian economy, as lower oil costs can help reduce inflation and boost growth.
As India’s energy demands grow, deals like the one with Russia are expected to play a major role in shaping the country’s energy strategy. For now, India is reaping the benefits of falling global crude prices while preparing for the future.
It’s a rare win-win situation – more oil, less money. And all eyes are on how India will leverage this momentum in the coming months.
