The growing pace of Russia’s oil in the Indian market is posing a further threat to Nigeria’s oil revenue, indicating uptake of Nigerian crude would diminish in the coming months.
Since Russia invaded Ukraine in late February, India’s imports of Russian oil have surged. Bloomberg calculations and Indian government data show that Russian barrels were cheaper than Nigerian barrels from April through June. That spread widened to nearly $19 a barrel in May, before easing to a $13 difference in June.
By comparison, in March, Russian crude sold at a $13 premium.
“Indian refiners are going to try and get their hands on the cheapest crude possible that works with their refinery and product configurations,” Bloomberg quoted oil market analyst Vandana Hari as saying.
In June, Russia beat out Saudi Arabia as India’s second-biggest crude supplier, ranked behind Iraq. Oil from Iraq was about $9 a barrel more expensive than Russian crude in May, but sold cheaper in all other months, per Bloomberg calculations.
“Russian crude fits that bill for now. The Saudis and Iraqis are not entirely losing out because they are directing more supply to Europe,” Hari added.
This development is significant for Africa’s biggest economy because India represents the largest importer of Nigeria’s crude oil, earning the sub-Saharan country about N13.9 trillion since 2015, according to data gathered by BusinessDay.
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Data gleaned from the National Bureau of Statistics (NBS) showed Nigeria exported crude oil worth N774.5 billion or ($1.86 billion) in the fourth quarter of 2021 to India.
Crude oil was followed by exports of liquefied natural gas at N89.8 billion and liquefied petroleum gas otherwise known as cooking gas at N6.7 billion to India.
“India remains one of the largest export markets for Nigeria and accounted for 15.2 per cent of total exports in the quarter, amounting to NGN874.9 billion,” NBS said.
Why Russia matters to India
The relationship between Russia and India also has considerable history, going back more than 50 years.
“This was the 1970s… during the war between India and Pakistan. Russia stood by India whereas the U.S. condemned India,” said Akhil Bery, director of South Asia Initiatives at the Asia Society Policy Institute. At the time, then-President Richard Nixon and Secretary of State Henry Kissinger were working with Pakistan to open China to the West, said Manjari Chatterjee Miller, senior fellow for India, Pakistan and South Asia at the Council on Foreign Relations.
While U.S. alliances in Asia have dramatically changed and its relationship with India has improved, officials still remember the conflict in the 1970s. “There’s still a long memory there,” added Bery.
The Council on Foreign Relations’ Miller said that as the geopolitical threat of China grows, India will continue to maintain relations with Russia, which continues to be its No. 1 provider of defense equipment.
″… Although India has been diversifying its military imports away from Russia since the end of the Cold War, the fact remains that much of its military hardware is still Russian, which means that it has to rely on Russia for parts, upgrades and software,” Miller said.