India's Oil Imports Plunge 11 Per Cent in December, See How US Sanctions Impacted Crude Supply

Official data revealed that the total value of crude oil imports fell by 10.6 per cent year-on-year, decreasing to $10.34 billion in December 2024 from $11.57 billion recorded in December 2023.

Imports from Saudi Arabia declined by 43.1 per cent, while Kuwait's supplies fell by 38 per cent during the period under review.

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India experienced a notable decline in crude oil imports in December 2024, largely due to reduced shipments from Russia and key West Asian suppliers such as Saudi Arabia and Kuwait.

Official data revealed that the total value of crude oil imports fell by 10.6 per cent year-on-year, decreasing to $10.34 billion in December 2024 from $11.57 billion recorded in the same month a year earlier, reported Business Standard.

Similarly, imports stood 16.5 per cent lower in comparison to $12.4 billion recorded in the preceding month. The data, released by commerce department, is typically released with a lag of three months. Notably, December marked the first drop in Russian crude imports in four months.

This suggested that crude shipments from Russia were already starting to fall before the fresh round of US sanctions against Moscow took effect in January.

Imports from Russia recorded an 18.48 per cent year-on-year decline, falling to $3.19 billion in December 2024 as compared to $3.92 billion logged in the corresponding month a year earlier.

Before this downturn, Russian crude supplies increased in the preceding months—by 8 per cent in November, 53 per cent in October, and 34.2 per cent in September. However, August saw a temporary decline due to maintenance-related shutdowns at multiple refineries within India.

Impact of Global Pricing and OPEC+ Decisions

One key factor influencing the decline in import value was the lower price of Brent crude oil, which averaged $4.57 per barrel cheaper in December 2024 compared to the previous year.

However, the drop in imports was not solely due to lower prices. A 12.3 per cent decline in crude oil volumes imported from Russia also contributed to the overall plunge.

Analysts suggested that rising domestic demand in Russia limited its export capacity. This was largely attributed to the resumption of refinery operations after scheduled maintenance. Additionally, declining discounts on Russian crude may have made alternative suppliers more attractive.

What Impacted Imports From Other Producers?

Among other major oil exporters, Saudi Arabia and Kuwait significantly reduced their shipments to India. Imports from Saudi Arabia declined by 43.1 per cent, while Kuwait's supplies fell by 38 per cent during the period under review.

The drop in crude volumes imported from these two countries was also substantial, down by 36.4 per cent and 33.6 per cent, respectively. The primary reason was a broader reduction in oil exports from both nations.

In early December, Saudi Arabia and its OPEC+ partners postponed the scheduled easing of production cuts. Instead, the existing reduction of 2.2 million barrels per day was postponed until April 2025. Refiners in India also scaled back purchases of Saudi crude due to price considerations, as the Arab Light variety traded at a premium of $2.5 per barrel over the regional benchmark.

As a result, Indian refiners turned to other West Asian suppliers, particularly Iraq and the UAE, which offered more competitive pricing. Notably, imports from Iraq surged by nearly 29 per cent during the period.

Market Adjustments and Future Trends

The shifting dynamics of oil supply in December suggested that India was likely to diversify its crude sources further in the coming months. This trend became more apparent in January after the United States imposed a sweeping package of sanctions targeting Russia’s oil sector.

On January 10, the outgoing US administration imposed restrictions on major Russian oil producers, intermediaries, traders, and port operators. Additionally, the sanctions targeted 183 vessels transporting Russian crude, some of which previously supplied oil to India.

Despite these developments, industry insiders indicated that global producers and Indian buyers managed to secure alternative supply arrangements. While some disruptions were inevitable, the transition was reportedly smoother than initially anticipated.