Indian Oil imports Defy G7 Cap as Russian prices soar

In October, the average cost of Russian oil delivered to India, its primary buyer, surged to $84.20 per barrel, surpassing the $60 price limit established by the Group of Seven nations in the preceding December, as per preliminary data from the Indian government. Despite attempts by Western nations to restrict revenue to Moscow and funding for the Ukraine conflict, India, the third-largest global oil importer and consumer, paid the highest prices for Russian oil since the imposition of the price cap. India has emerged as the foremost purchaser of Russian crude via maritime routes, particularly as Western countries scaled back purchases following Moscow's invasion of Ukraine over a year ago. In September, India had acquired Russian oil at an average price of approximately $81.24 per barrel, as calculated by Reuters based on the latest data from the Indian Trade Ministry's website. There are expectations of an increase in India's intake of Russian oil with the softening of prices, as stated by a government official last week. The cost of Russia's primary Ural grade in Baltic ports has fallen below the $60 per barrel ceiling since late November. Despite international efforts to reduce reliance on Russian oil, India, seeking to minimise its crude import expenditures, finds the average cost of Russian oil more favourable than that from Iraq and Saudi Arabia, the second and third-largest oil suppliers to India. In October, barrels of oil from Iraq and Saudi Arabia averaged $85.97 and $98.77, respectively. Aside from direct Russian supplies, Indian refiners also receive Russian oil from ports in Greece, Spain, and Korea. The majority of Indian refiners purchase Russian oil on a delivered basis, with sellers handling shipping and insurance arrangements. While the G7-imposed ceiling permits the utilisation of Western services such as shipping and insurance, adherence to this limit remains challenging. The Indian government data does not specify additional charges like freight and insurance, but these costs significantly exceed the $60 per barrel price cap. In an effort to curb Moscow's revenue and close loopholes, the United States recently imposed sanctions on maritime companies and vessels involved in shipping Russian oil sold above the $60 price cap.