Possible UPSC Questions

• Prelims: With reference to India’s crude oil imports in 2025, which of the following is/are correct? (a) Russia supplied ~38% of India’s August arrivals; (b) Discounts on Russian crude widened from ~$40/bbl in 2023 to ~$1.5/bbl recently; (c) Iraq and Saudi supplies fell as Russian inflows rose.

• Mains (GS-III/GS-II): “India’s crude basket diversification since 2022 reflects a shift from margin maximisation to risk hedging.” Discuss in the context of secondary-sanctions risk and energy security.

• Mains (GS-III): Examine the macroeconomic implications of discounted crude (CAD, inflation, refinery margins) and vulnerabilities if discounts shrink or logistics tighten.
  

Quick Outline of Key Facts

• Volume & share (Aug): ~2.0 million bpd from Russia (≈38% of ~5.2 mbpd total imports). Up from 1.6 mbpd in July.

• Offsetting fall: Iraq ~0.73 mbpd; Saudi ~0.53 mbpd; U.S. ~0.26 mbpd (5th largest).

• Why inertia in Aug? Cargoes booked in June–early July; policy/price shocks show in late Sep–Oct arrivals.

• Policy stance: No GoI directive to cut Russian volumes; “business as usual” per IOC chief.

• Company signals:
  • IOC: Russian crude ~22% of its throughput (Apr–Jun); steady near term.

  • BPCL: Russian share dipped as discounts narrowed to ~$1.5/bbl (now > $2); plans 30–35% Russia if no new sanctions.

• Context: Russia now 35–40% of India’s crude intake (pre-2022: <0.2%). Discounts peaked near $40/bbl, now slim.

• Strategy: Greater scouting from U.S., West Africa, Latin America—hedging, not replacement. Indian refiners still source 60–65% from non-Russian suppliers.
  

Summary

India’s refiners lifted Russian crude purchases to ~2 mbpd in August, raising Russia’s share to ~38% of arrivals and displacing volumes from Iraq and Saudi Arabia. Analysts attribute August resilience to lead-time effects—cargoes fixed before late-July tariff rhetoric—implying any realignment will be visible from late September/October discharge windows.

Despite U.S. pressure and tariff frictions, New Delhi has issued no directive to reduce Russian intake. PSU leadership (IOC, BPCL) stresses commercial criteria: refinery configuration, grade compatibility, landed economics, and logistics. Yet the economics have tightened—Russian discounts have shrunk from ~$40/bbl at their peak to ~$1.5–2/bbl now—prompting selective pullbacks and portfolio hedging rather than an outright pivot.

Strategically, Russia’s rise to 35–40% of India’s crude basket underscores a post-2022 structural shift driven by discounts and availability. However, refiners are diversifying toward the U.S., West Africa, and Latin America to manage sanctions, payments, shipping, and insurance risks. The operative mindset is moving from margin maximisation to energy-security and logistical risk management. Unless formal sanctions or a decisive change in trade economics emerges, Russian barrels remain integral to India’s mix, with 60–65% still sourced from non-Russian origins.

Significance to the UPSC Exam

• GS-III (Economy/Energy): Oil import mix, pricing/discount dynamics, CAD, inflation pass-through, refinery margins, and strategic reserves.

• GS-II (IR): Balancing ties with the U.S. and Russia; autonomy in energy policy; implications of secondary sanctions and payment channels.

• Essay/Case Study: “Strategic autonomy vs economic pragmatism in hydrocarbons.”

Prelims facts: Current supplier ranks, approximate shares, discount trend, and the lead-time logic of crude procurement (bookings vs arrivals).