India cut its purchases of Russian oil due to rising prices and competition with China - Bloomberg
Kyiv • UNN
Indian refineries reduced their purchases of Russian oil due to the rising price of Urals and competition with China. Supplies from the Middle East increased.
Indian oil refineries have reduced purchases of Russian crude for November delivery, as growing competition from China is driving up prices at a time when buyers can use alternative supplies from the Middle East. UNN writes about this, citing Bloomberg.
Details
According to sources familiar with the situation, the reduction in purchases was prompted by a sharp increase in the price of Russia’s flagship Urals crude, loaded in the Baltic region, which is the main feedstock for Indian refineries. Economic factors outweighed pressure from Washington on New Delhi to reduce purchases from Russia, the country’s largest oil supplier, the publication writes.
Russian crude is being offered at a premium of more than $10 per barrel compared with Brent, sources said. Previously sold at steep discounts, the crude is now being sold at nearly comparable prices to Middle Eastern grades, prompting Indian refineries to turn back to suppliers from the Persian Gulf, the sources said. Some of these cargoes are also being offered to independent Chinese refineries.
Refineries in the world’s third-largest oil-importing country had already reduced purchases of Russian crude after a sweeping U.S. sanctions law increased the threat of punitive tariffs.
According to Kpler, Moscow’s share of India’s oil imports fell to about 35% in September from 56% in July. According to tanker-tracking data compiled by Bloomberg, supplies averaged just 310,000 barrels per day in the four weeks to October 4, the lowest level since March 2022.
China and India remain the largest buyers of Russian crude, with many cargoes receiving their final destination only after they are already in transit.
"Over the past few months, China’s imports of Russian crude have increased, intensifying competition for barrels that would otherwise have been available to Indian refineries," said Sumit Ritolia, a senior modeling manager at Kpler. "This has partly coincided with China’s reduced access to Iranian oil."
According to sources, New Delhi did not ask refineries to reduce imports from Russia in response to risks related to U.S. tariffs. India’s Ministry of Petroleum did not immediately respond to a request for comment.
Meanwhile, supply volumes from the Middle East have increased, as more tankers pass through the Strait of Hormuz despite the continuing risks associated with Iranian attacks on vessels, which have become more frequent. According to Shell Plc Chief Executive Officer Wael Sawan, volumes have recovered to approximately 80% of prewar levels. In addition, oil from the Persian Gulf benefits from shorter voyages and lower transportation costs, increasing its appeal to Indian buyers amid rising tanker freight rates.
Along with China, India became an important market for Russian oil after Western sanctions redirected exports away from Europe following Russia’s invasion of Ukraine in 2022. India’s shift toward Middle Eastern oil could intensify competition for crude from the Persian Gulf, as Asian refineries secure supplies for the final months of the year.
"India is certainly diversifying its sources of oil by increasing supplies from the Middle East and the Americas," Ritolia said.