While the West was busy imposing sanctions, price caps, and a ban on Russian crude oil, Indian refiners targeted the discarded barrels at discounted rates. The oil was bought on Free On Board (FOB) basis, where the refiners paid for shipping and insurance costs to avoid the challenges arising from sanctions. The discount pushed the barrel cost below $60. This put Russia at the top spot for crude oil supply to India with a 28 per cent share, followed by Iraq (20 per cent), Saudi Arabia (17 per cent), and the US (9 per cent).
Before February 2022, Russia’s share of Indian imports was 0.2 per cent due to infeasible logistics costs. At the India Energy Week 2023, India’s Foreign Minister, S Jaishankar, and Oil Minister, Hardeep Singh Puri, took a strong stand to keep their sources for crude oil import open to meet the country’s demands.
Russia and its oil buyers are allowed to use vessels, insurance, and funds outside the jurisdiction of G7, which includes the US, the UK, Canada, France, Italy, Germany, and Japan. But using non-Western shipping and insurance services increases the overall cost.