Russia Undercuts Saudi Oil in India as Competition Heats Up

(Bloomberg) - A bitter battle is brewing in India, where Russia has undercut the price of its OPEC+ ally Saudi Arabia's oil, paving the way for Moscow to expand market share in one of the biggest crude oil importers.
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Russian barrels were cheaper than Saudi crude from April to June, with the discount widening to nearly $19 a barrel in May, according to Bloomberg calculations based on Indian government data. Russia overtook the kingdom in June as India's second largest supplier, just behind Iraq.
India and China have become willing consumers of Russian crude as most other buyers avoided its barrels after invading Ukraine. The South Asian nation imports 85% of its oil needs and cheap supplies are providing some economic relief as the country faces elevated inflation and a record trade gap.
The country's crude oil import bill rose to $47.5 billion in the second quarter after a surge in global prices coincided with a rebound in fuel demand, according to government data. That compares to $25.1 billion for the same period last year when prices and volumes were lower. Oil prices have tumbled lately on concerns over an economic slowdown, giving consumers some breathing space.
"Indian refiners will look to get their hands on the cheapest crude that will work with their refinery and product configurations," said Vandana Hari, founder of Vanda Insights in Singapore. “For now, Russian crude fits that bill. The Saudis and Iraqis are not losing out entirely because they are channeling more supplies to Europe.”
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While Russian oil's discount to Saudi crude narrowed in June, barrels were still around $13 cheaper, averaging around $102. This compares to a premium of just over $13 in March, although most of India's monthly supply would have been locked in before the invasion at the end of February. The kingdom was India's second largest supplier in 2021, while Russia was the ninth largest.
Iraq was India's top crude oil supplier and held that position through June this year. OPEC producer oil was about $9 a barrel higher than Russian barrels in May but was at a discount in all other months. India's imports from Russia have increased tenfold since March.
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