Crude oil imports from Russia fell roughly 38 per cent in December from last month to 1.14 million barrels per day (bpd), according to data from maritime intelligence firm Kpler. India imported 1.83 million barrels of crude oil each day from Russia in November.
Why did India’s Russian crude imports drop to a three-year low in December?
From November 21, US President Donald Trump sanctioned two major Russian oil producers, Rosneft and Lukoil, which supply around 60 per cent of India’s oil imports from Moscow. Also, under the European Union’s 18th sanctions package, the bloc banned imports of refined oil products derived from Russian crude into Europe.
Indian refiners have cut crude oil purchases from Russia in response to the sanctions imposed by the West, despite Moscow offering attractive discounts. Russia has doubled discounts for Indian refiners on crude purchases to around $5 per barrel after the US sanctions, two industry executives told Business Standard. Russian President Vladimir Putin, during his visit to India earlier this month, also assured Moscow’s readiness to provide uninterrupted fuel shipments to New Delhi.
Which Russian suppliers accounted for most of India’s crude inflows in December?
Despite the US sanctions, Rosneft was India’s largest crude oil supplier from Russia in December, while Lukoil also accounted for robust supply. According to Kpler data, Rosneft supplied around 667,000 bpd and Lukoil provided 46,000 bpd of crude oil to Indian refiners during the month.
This comes as Rosneft-backed Nayara Energy continues strong purchases from Russia, while Mukesh Ambani-led Reliance Industries Ltd (RIL), India’s largest buyer of Russian crude oil, obtained a one-month concession from Washington for buying oil cargoes from Rosneft, Reuters reported.
RIL had a long-term contract to purchase nearly 500,000 bpd of crude oil from Rosneft. The private refiner has stopped importing Russian oil into its export-focused special economic zone refinery in Jamnagar, Gujarat, with Russian oil cargoes to be processed at its domestic tariff area unit arriving on or after November 20, the company had said.
Will India’s Russian crude imports recover from January?
Experts believe the dip in India’s oil imports from Russia appears to be a near-term adjustment, with purchases expected to recover gradually from January as new intermediaries step in and supply chains re-establish.
“As long as broader secondary sanctions are not enforced, India is expected to continue importing Russian barrels as economics support the case, albeit increasingly through indirect and less transparent channels, keeping these barrels structurally embedded in India’s crude basket,” said Sumit Ritolia, lead research analyst, refining and modelling, Kpler.
Which Indian refiners bought Russian crude in December?
In December, Nayara Energy bought the maximum amount of Russian crude oil among Indian refiners, followed by state-run Indian Oil Corporation Ltd (IOCL) and Reliance Industries, Kpler data showed. Hindustan Petroleum Corporation Ltd (HPCL) and Mangalore Refinery and Petrochemical Ltd (MRPL) refrained from buying any Russian oil cargoes during the month.
Unlike private players, state-owned Indian refiners, including Indian Oil, Bharat Petroleum Corporation (BPCL), HPCL and MRPL, buy Russian oil through traders, which shields them from any direct impact of the sanctions.
Which suppliers did India turn to as Russian inflows fell?
To replace Russian barrels, Indian refiners increased reliance on West Asian suppliers, including Iraq, Saudi Arabia, the UAE and Kuwait, in December. India bought 982,000 bpd of crude from Iraq, 732,000 bpd from Saudi Arabia, 566,000 bpd from the UAE and 330,000 bpd from the US during the month.