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India increases Saudi oil imports due to payment issues with Russia

India increases Saudi oil imports due to payment issues with Russia India is buying more from Saudi Arabia now (Photo: Getty Images)

India increased its import of Saudi oil in December as payment issues led to a decline in purchases of Russian oil to an 11-month low, reports Reuters.

It is stated that at least five shipments of Sokol grade oil were redirected elsewhere.

The Indian Oil Corporation, which was supposed to receive Sokol oil, had to forgo its supplies and purchase oil from the Middle East to fill the deficit.

Declining imports of Russian oil
The leading oil refinery, IOC, the only state-owned company that annually enters into an agreement to purchase various Russian oil grades, including Sokol, from the Russian oil company Rosneft, saw a decrease in Russian oil imports in December by 16-22%. However, the import of Saudi oil increased by approximately 4%.

"LSEG data shows India's monthly Russian oil imports declining by 22% to 1.21 million barrels per day (bpd) in December, while Kpler shows a drop of 16% to 1.39 million bpd," the material states.

Russian oil exports

Revenue from oil exports is crucial for the Russian budget and supports Moscow's military economy.

The EU has banned the import of Russian crude oil delivered by sea and refined oil products. The consequences of the ban on oil for Russia are significant, as nearly half of its total oil exports went to the EU. In 2021, the EU imported 71 billion euros worth of oil, including crude oil (48 billion euros) and refined oil products (23 billion euros) from Russia. Losing this leading lucrative market has a significant structural impact on Russia, whose budget heavily relies on oil revenues.

At the same time, the Indian route, one of the most lucrative Russian oil trade routes since the imposition of Western sanctions, is facing a serious problem due to payment issues in a currency other than the dollar, with no short-term solution.