India's demand for fuel hit a quarter-century high in February

Russian crude imports reached a record level of 1.6 million barrels per day
India's demand for fuel hit a quarter-century high in February
Photo: Krishnendu Halder (Reuters)
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The demand for fuel in India rose to its highest level in at least 24 years in February, partly due to Russian oil imported at a hefty discount.

Fuel consumption rose by more than 5% to 4.82 million barrels per day last month, marking a 15th consecutive year-on-year rise, Reuters reported. The sale of petrol rose 8.9% year-on-year to 2.8 million tonnes and that of diesel by 7.5% to 6.98 million tonnes. The consumption of aviation fuel climbed more than 43% to 0.62 million tonnes.

This rise underlines strong consumption within India and refining Russian crude at a profit, according to Viktor Katona, the lead crude analyst at commodity analytics firm Kpler.

Russian crude imports at a record high

India’s Russian crude imports hit a record high in February at 1.6 million barrels per day, overshadowing the imports from Iraq and Saudi Arabia combined. From a mere 0.2% in February 2022, it has swollen to 35% in just a year since Russia invaded Ukraine.

Indian refiners, who seldom bought Russian oil because of costly logistics, have begun paying for Russian oil in dirhams through Dubai-based traders, instead of the US dollar.

This has eventually turned Russia into India’s key supplier of crude oil. Despite a price cap imposed by G7 nations on Russian oil in December last year, Indian refiners have been buying it at prices that cover even delivery. This is a win-win for India, which imports 85% of its fuel requirement, as well as G7.

Last month, Geoffrey R Pyatt, the US assistant secretary of state for energy, said India is snapping up Russian crude at about $15-a barrel discount, and this is “furthering the policy of our G7 coalition...in seeking to reduce Russian revenues.”

Government data suggests that India’s fuel demand is likely to increase by 4.7% in the coming financial year to 233.8 million tonnes from the revised estimate of 222.9 million tonnes for the ongoing fiscal year.