What is more surprising is that a surge in Russian oil supplies has come after the G7 imposed stringent sanctions on Moscow.
If the US-led G7 nations thought that tightening the screws on supplies of Russian crude oil would hurt shipments of discounted fuel to India and China, they were mistaken.
Russian crude supplies are turning what were initially opportunistic purchases into a permanent fixture for India.
India imported 57 million barrels of Russian crude oil in March (1.8 million barrels a day), on a par with record February purchases, according to data from Paris-based market analytics firm kPler.
Russia led the pack of crude suppliers to India in March, supplying twice as much crude to India as Iraq, once India's biggest crude supplier.
The gap between both nations was as low as 9 million barrels in December -- when the G7 first announced a price cap on Russian oil exports.
That gap has since widened to around 28 million barrels last month, demonstrating the increasing clout of Russian grades.
Russia has been the top draw for Indian refiners since June, relegating Iraq to second place, and Saudi Arabia to third spot.
The share of Russian oil in India's overall crude import basket jumped to 35 per cent in the January-March period from 16 per cent for calendar 2022, and from 2 per cent in pre-war 2021 -- it was a record 38 per cent in March.
During the same period, the combined share of the top three West Asian suppliers to India --Iraq, Saudi Arabia and UAE -- declined to 43 per cent this year from 50 per cent last year.
The share of US oil nearly halved to a little over 5 per cent this year from 2021, and the share of Nigeria, a supplier of sweet grades, dropped by two-thirds to 2 per cent.
What is more surprising is that a surge in Russian oil supplies has come after the G7 imposed stringent sanctions on Moscow.
On December 5, a $60-a-barrel price cap on Russian crude oil exports came into force, with a grace period for older shipments until January 19.
The US also introduced a provision that importing nations such as India cannot avail of Western tankers and insurance facilities if the price of Russian oil exceeded the cap.
That condition was much more troubling for India than China, which is self-sufficient in tankers to ferry crude to its refineries.
On the other hand, India lacked shipping and storage infrastructure to bring in spot crude, a top official from a state refiner said.
Typically, India buys spot crude on a delivered basis, and all Russian supplies are sold on spot terms.
"There is no reason to believe that Russian oil flows to India are only temporary," said Tilak Doshi, a London-based international oil expert with senior level stints in Saudi Arabian think tank KAPSARC and state-oil company Aramco.
Doshi referred to the crude supply contract signed between Russian State Rosneft and State refiner IOC.
"This is an indication that oil trading between Russia and India is robust and will remain so into the future," he added.
Rosneft said that shipments to IOC would grow significantly, accompanied by a diverse supply of crude grades.
The agreement builds from an initial agreement in December 2021, when the two companies signed a deal to supply 40,000 barrels a day of Urals in 2022.
IOC bought 425,000 barrels a day of Russian crude in March.
Russian Deputy Prime Minister Alexander Novak has said that Russian crude exports to India increased 22-fold last year.
Prime Minister Narendra Modi's government's open backing for buying discounted oil from Russia, defying US pressure, is a key reason for India's growing appetite for Russian oil. But for New Delhi's support, State oil companies led by IOC could not have bought 89 million barrels of Russian oil, or 58 per cent of total Russian purchases, in the January-March period.
At 13 million barrels in March, IOC's purchases were second only to Reliance's 17 million barrels, and more than twice that of Rosneft-operated Nayara Energy.
The government has also gained from this exercise. It has kept pump prices of diesel and petrol steady for over 10 months to control inflation.
It felt no need to subsidise diesel and petrol sales of State oil companies, asking the refiners to adjust their losses by increasing purchases of discounted Russian oil.
Political backing was only part of the reason for surging Russian crude flows. Indian refiners had to jump several banking hoops to keep the oil flowing.
India diversified its basket of Russian crudes from Urals, a medium, sour grade, to lighter oils including Novy Port, Sokol, ESPO, CPC and Siberian Light, enabling more Indian refineries to process the crude.
That helped increase the share of discounted Russian supplies in the crude basket, and also hedge sanction risks.
For instance, BPCL and HPCL's Mumbai refineries are designed for sweeter crude grades; other plants can absorb high-sulphur Urals if blended with sweeter grades.
Urals, which accounts for a bulk of India's Russian purchases, trades below the Western price cap, exempting it from sanctions. But the State Bank of India is asking for a break-up of the delivered price of Urals in the invoice to make sure that the FOB, or loading value, of Urals is below the $60-a-barrel mark, industry officials said.
Such break-ups are being provided, and in cases where other sweet grades are involved that trade above the cap, Indian state refiners are using smaller banks such as UCO Bank or Indian Bank, which have little exposure to the US, to make payments, a top government official said.
Some trades are also being settled in dirhams because Russian oil companies prefer the UAE currency, said a Novatek official, the largest independent natural gas producer in Russia.
Reliance has extensive trading operations in Dubai and Singapore, and is able to settle oil trades in dirhams.
Indian State refiners are able to pay for Sokol crude, which comes from ONGC's share of a 20 per cent stake in the Sakhalin-1 area, in rupees, an industry official said.
However Russian companies are not keen on accepting rupees for oil payments, concerned that they will be left with a pile of Indian currency to manage.
Sberbank, VTB Bank and Gazprombank have opened vostro accounts to facilitate rupee trade but there is less appetite for Indian goods in Russia.
Where Western ships and insurance cannot be used, companies such as Mumbai-based Gatik Ship Management are helping ship Russian oil.
The company has spent $1.3 billion to secure over 45 tankers to ship oil, according to reports by shipping trade publications Tradewinds and Splash 247.
Feature Presentation: Rajesh Alva/Rediff.com
