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Mint
03-06-2025
- Business
- Mint
Indias imports of Russian oil hit 10-month high in May
New Delhi, Jun 3 (PTI) India's imports of Russian crude oil surged to a 10-month high of 1.96 million barrels per day in May, driven by continued availability at significant discounts compared to global benchmark prices, according to ship-tracking data from Kpler. India, the world's third largest oil importing and consuming nation, bought from abroad around 5.1 million barrels of crude oil, which is converted into fuels like petrol and diesel in refineries. Of this, Russia was the largest supplier, accounting for over 38 per cent of the supplies. Iraq maintained its position as the second-largest supplier, with 1.2 million bpd of sales to India. Saudi Arabia exported 6,15,000 bpd, while the United Arab Emirates (UAE) supplied 4,90,000 bpd. The United States routed out the top five, delivering 2,80,000 bpd, underscoring India's push to diversify import sources and balance geopolitical exposure. "Overall, India's crude import profile for May 2025 highlights its price-sensitive, diversified sourcing strategy. Russian volumes remain elevated despite external pressures, reinforcing the primacy of economic pragmatism in India's energy policy," said Sumit Ritolia, Lead Research Analyst, Refining & Modeling at Kpler. India, which has traditionally sourced its oil from the Middle East, began importing a large volume of oil from Russia soon after the invasion of Ukraine in February 2022. This is primarily because Russian oil was available at a significant discount to other international benchmarks due to Western sanctions and some European countries shunning purchases. This led to India's imports of Russian oil seeing a dramatic rise, growing from less than 1 per cent of its total crude oil imports to a staggering 40-44 per cent in a short period. Ritolia said Russia continues to offer crude at notable discounts compared to benchmarks like Brent and Dubai or compared to Middle Eastern grades on a landed cost basis. "The strong inflow of Russian barrels into India is driven by a combination of economic, operational, and geopolitical factors," he said. A key advantage lies in the pricing of Urals crude from Russia, which, although not always steeply discounted, remains significantly cheaper than West African and Middle Eastern grades. "This pricing edge has supported stronger refinery gross margins for Indian processors. For instance, in May, average FOB prices for Urals stood around USD 50 per barrel, comfortably below the USD 60 a barre; price cap set by Western allies," he said, adding this favourable pricing attracted substantial shipping capacity - at least 20 tankers, previously dedicated to non-sanctioned trades, were repurposed to transport Urals. As a result, export volumes rose notably. He saw Russian crude retaining a 30–35 per cent share in India's import mix, especially if refining margins remain strong, FOB economics continue to be favourable, and sanctions remain limited in scope. "However, there are some small headwinds to look at on the horizon. Kpler data suggests a modest rebound in Russian refinery throughput, potentially increasing by 1,00,000-3,00,000 bpd in the coming months. This could reduce Russia's export availability by a corresponding margin and may slightly temper flows to India post-May," he said. India is likely to maintain a diversified crude basket, but Russian barrels will remain central to its import strategy - provided discounts persist and payment mechanisms remain viable, he added. With the monsoon season approaching, some Indian refiners may reduce crude runs, which could temporarily affect imports, particularly of sweeter grades, he noted. Crude exports from the Middle East to India are expected to retain a stable to slightly lower share in the near term, influenced by seasonal refinery patterns and continued competition from Russian supplies. Nonetheless, the region's long-term strategic reliability ensures that it remains an important component of India's supply chain. When Russia invaded Ukraine in February 2022, it triggered a series of sanctions from the US, the European Union, and other Western nations aimed at crippling Russia's economy. One of the main sanctions was on Russian oil exports, which significantly impacted Russia's ability to sell oil to European markets. As a result, Russia began offering crude oil at heavily discounted prices in an attempt to find new buyers for its oil. India, with its large energy needs and an economy sensitive to oil price fluctuations, found this offer too attractive to ignore. The price discount on Russian oil, sometimes as much as USD 18-20 per barrel lower than the market price of other oil, allowed India to procure oil at a much cheaper rate. The discounts have, however, shrunk in recent times to less than a fifth of the peak.
Indian Express
30-05-2025
- Business
- Indian Express
As discounts, subdued prices make Moscow's crude sanction-proof, India's Russian oil imports touch 10-month high in May
Sizable discounts amid subdued international oil prices are helping Russia maintain its dominant market share in India's oil import basket, notwithstanding the geopolitical complexities and limited Western sanctions on Russian crude. India's oil imports from Russia touched a 10-month high in May as the combination of low international oil prices and sustained discounts on Russian oil ensured adequate availability of non-sanctioned tankers to move Russian oil without violating Western sanctions. Greater availability of non-sanctioned oil tankers is evidently offsetting the constraints that came with the US sanctioning numerous tankers of Russia's shadow fleet in January for sanction violations, per trade sources. India's Russian oil imports so far this month have risen 1.6 per cent over April to 1.97 million barrels per day (bpd), per provisional vessel tracking data from commodity market analytics firm Kpler. The share of Russian crude in India's oil import basket is nearly 39 per cent in May. At 5.11 million bpd, India's overall oil imports for the month have been higher by 5.2 per cent sequentially. Data for the full month is expected to stay at these levels, barring a few insignificant fluctuations. The average price of Russia's flagship crude grade Urals—also the mainstay of India's Russian oil imports—was around $50 per barrel excluding shipping and insurance costs in May, which is $10 per barrel lower than the Western price cap of $60 per barrel for Russian oil. This was due to a combination of the current low oil price environment and discounts offered by Russian oil suppliers and traders. Consequently, tanker and insurance availability has not been a major concern as the price cap mechanism enforced by G7 countries allows Western shippers and insurers to participate in Russian oil trade if the oil is priced below the cap. According to Sumit Ritolia, Lead Research Analyst, Refining & Modeling at Kpler, at least 20 tankers previously used to exclusively haul non-sanctioned crude entered the market to transport Urals cargoes in May. Urals crude accounts for around three-fourths of India's Russian oil imports. 'Russian volumes remain elevated despite external pressures, reinforcing the primacy of economic pragmatism in India's energy policy…Indian refiners often respond to opportunistic buying behaviour. As per trends, India has capitalised on discounts, particularly from sanctioned or price-sensitive suppliers like Russia…May's uptick in volumes indicates competitive pricing by suppliers versus benchmarks like Brent,' Ritolia said. Urals continues to trade at a discount to rival grades from India's traditional suppliers in West Asia. To be sure, the discounts have shrunk over time, but they still remain worthwhile for India's refiners as the country depends on imports to meet over 85 per cent of its crude oil needs. Even as sanctions persist, their enforcement remains porous, enabling Indian refiners to maintain steady access to Russian crude. Industry sources expect Indian refiners and Russian oil suppliers and traders to continue navigating the sanctions successfully without taking any major risk in the near to medium term. Indian refiners have publicly stated that they are ready and willing to buy Russian oil if the transactions, suppliers, traders, shippers, and insurers involved are not under sanctions. Going by Kpler's estimates, Russia's share in India's oil import mix is likely to stay elevated in the 30–35 per cent range over the coming months, especially if price economics stay favourable and Western sanctions stay limited in their scope and enforcement. Russian oil flows to India could temper a bit in the coming months as Russia's domestic refinery throughput is likely to increase, which may limit the volumes available for exports. Besides Russian volumes, India increased oil imports from the Middle East—mainly Iraq and the United Arab Emirates (UAE)—and the US in May, 'indicating strategic diversification to balance geopolitical risk while fulfilling economic imperatives', Ritolia said, adding that India's crude import profile for May 2025 highlights its price-sensitive and diversified sourcing strategy. India's oil imports from its second-largest source of crude—Iraq—stand at 1.18 million bpd so far in May, accounting for 23 per cent of India's total oil imports during the month. Saudi Arabia retained its position as India's third-largest source of crude by supplying 0.57 million bpd, resulting in a market share of around 11 per cent. The UAE and the US were next in the suppliers' pecking order with a market share of 9.2 per cent and 5.6 per cent, respectively. Iraq and Saudi Arabia were India's top two suppliers of crude oil prior to the war in Ukraine. But as Western buyers started shunning Russia's oil in the wake of its February 2022 invasion of Ukraine, India and China emerged as the top destinations for Russian crude. 'By diversifying its crude supply across Russia, the Gulf states, and the US, India maintains a diplomatic hedge. This multi-aligned strategy enhances India's energy security and strengthens its bargaining power in a multipolar global oil market,' Ritolia said. Sukalp Sharma is a Senior Assistant Editor with The Indian Express and writes on a host of subjects and sectors, notably energy and aviation. He has over 13 years of experience in journalism with a body of work spanning areas like politics, development, equity markets, corporates, trade, and economic policy. He considers himself an above-average photographer, which goes well with his love for travel. ... Read More
