According to a government official, India’s procurement of Russian oil is anticipated to become costlier as shipments from Moscow are opting for a longer route via the Cape of Good Hope to circumvent attacks on commercial vessels along the Red Sea route.
The redirection of shipments through the Cape of Good Hope, located at the southern tip of Africa, has emerged as the preferable alternative for cargo vessels aiming to avoid the conflict-ridden Red Sea region.
As a result of attacks by Houthi rebels, shipping expenses have escalated for Indian companies, with major freight firms opting for the lengthier route around Africa to reach western destinations or waiting at nearby ports for safe passage through the Suez Canal.
Following the onset of the Russia-Ukraine conflict, India escalated its oil imports from Moscow due to significant discounts offered. Consequently, Moscow has overtaken the lead position in India’s crude oil imports, trailed by Iraq and Saudi Arabia. However, with sanctions imposed by the Group of Seven nations on ships and vessel operators carrying Russian oil exceeding the $60 per barrel cap, Russian oil has become less appealing to India. Considering the potential rise in prices due to the Red Sea crisis, India is expected to rely more on its traditional West Asian partners for crude oil requirements.
Media reports citing data from energy cargo tracker Vortexa and industry sources revealed that India’s crude oil imports from Russia declined for the second consecutive month in January, reaching the lowest level in 12 months. Despite this decline, Russia continued to be India’s primary oil supplier.
Presently, crude oil prices hover around $80 per barrel, contrasting with the peak of $140 per barrel witnessed in 2022.
