India's imports of crude oil from Russia soared to a record 1.6 million barrels per day in February and is now higher than combined imports from traditional suppliers Iraq and Saudi Arabia.
Russia continued to be the single largest supplier of crude oil, which is converted into petrol and diesel at refineries, for a fifth straight month by supplying more than one-third of all oil India imported, according to energy cargo tracker Vortexa.
Refiners continue to snap up plentiful Russian cargoes available at a discount to other grades.
From a market share of less than 1% in India's import basket before the start of the Russia-Ukraine conflict in February 2022, Russia's share of India's imports rose to 1.62 million barrels per day in February, taking a 35% share.
India, the world's third-largest crude importer after China and the United States, has been snapping Russian oil that was available at a discount after some in the West shunned it as a means of punishing Moscow for its invasion of Ukraine.
The rise in Russian imports have been at the expense of Saudi Arabia and United States. Oil import from Saudi fell 16% month-on-month and that from the U.S. declined 38%.
According to Vortexa, Russia now accounts for more than the combined oil bought from Iraq and Saudi Arabia — India's mainstay oil suppliers for decades.
Iraq, whom Russia has toppled to become the largest oil source for India, supplied 9,39,921 barrels per day (bpd) oil in February while Saudi supplied 6,47,813 bpd oil.
UAE overtook U.S. to become the fourth largest supplier at 4,04,570 bpd. The U.S. supplied 2,48,430 bpd, down from 3,99,914 bpd in January.
Iraq and Saudi supplies are the lowest in 16 months.
"Indian refiners are enjoying a boost in refining margins from processing discounted Russian crude," said Vortexa's head of Asia-Pacific analysis, Serena Huang.
"Refiners' import appetite for Russian barrels are likely to remain robust as long as the economics are favourable, and financial and logistical services to support the trade are available." Russia is selling record amounts of crude oil to India to plug the gap in its energy exports after the European Union banned imports in December.
In December, the EU banned Russian seaborne oil and imposed a $60-per-barrel price cap, which prevents other countries from using EU shipping and insurance services, unless oil is sold below the cap.
Industry officials said Indian refiners are using UAE's dirham to pay for oil that is imported at a price lower than $60.
"Almost a quarter of the Russian imports are now paid in dirham," an official said.
From a market share of just 0.2% in India's import basket before the start of the Russia-Ukraine conflict, Russia's share in India's imports rose to 35% in February 2023.