Russian oil exports to India rise as Europe shuns cargoes

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Russian oil exports to India rise as Europe shuns cargoes

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Russian oil exports to India quadrupled this month as a sign of the vast reshaping of global energy flows since the Russian invasion of Ukraine.

India, the third largest energy-consuming country in the world, has bought numerous shipments of Russian oil from traders as buyers in Europe have avoided the country’s vast commodity market following Western sanctions in Moscow.

So far, Russia has exported 360,000 barrels of oil per day to India in March, nearly four times the 2021 average. The country is on track to hit 203,000 barrels per day for the full month based on current shipping schedules. according to Kpler, a commodity analytics and data company. The export data represents the cargoes that have been loaded onto oil tankers and are en route to India.

Alex Booth, head of research at Kpler, said India typically buys CPC, a blend of Kazakh and Russian crude efficiently, but the big March hike was for Russia’s flagship Urals crude, suggesting that Indian buyers weighed significant discounts against public opinion.

“The oil cargoes already committed by Russia that cannot find buyers in Europe are being bought by India,” he said. “Exports to India increased in March ahead of any official announcement from New Delhi.”

On Tuesday, White House Press Secretary Jen Psaki warned that India would be on the wrong side of history if it bought Russian oil, although she acknowledged that the purchases would not violate US sanctions.

Historically, Russian crude oil has accounted for less than 5% of India’s total imports, which were 4.2 million barrels per day last year.

“Indian companies were not sourcing much from Russia given the high shipping costs,” said Vivekanand Subbaraman, a research analyst at Ambit Capital. “It looks like it’s changing now.”

Lars Barstad, chief executive of Frontline, a New York-listed oil company, said the discount on the Russian Urals was about $ 25-30 per barrel, while freight rates would add just $ 3-4 per barrel, making economic trade.

Frontline and other oil companies have shied away from trading Russian oil due to the complexity of enforcing sanctions, but many oil majors and traders are legally contracted to continue lifting Russian barrels.

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India and Russia have a long-standing partnership, from defense to trade, and Putin visited India last December, only his second overseas trip since the pandemic. So far New Delhi has abstained from UN votes condemning Russian aggression.

With 85% of India’s crude oil needs covered by imports, rising oil prices are a drag on its treasury.

Subbaraman said: “I think all three state refineries will buy oil from Russia, as energy is import-dependent and politically sensitive to Indians.”

Speaking to Indian lawmakers this week, Indian Oil Minister Hardeep Singh Puri pointed out that energy prices in India have not risen as much as in Europe and the United States, rising by only 5%. India would act in the interest of local consumers within “the room for persuasion”, he added.

Russian Deputy Prime Minister Alexander Novak and Singh Puri spoke on the phone last week. “We are interested in further attracting Indian investment in the Russian oil and gas sector and expanding the sales networks of Russian companies in India,” Novak said.

Indian officials said the central bank and the government are trying to establish a rupee-ruble swap mechanism, which would facilitate trade after Western restrictions on international payments to and from Russia.

The two countries have several common energy interests. Rosneft owns 49% of Nayara Energy, which operates India’s second largest refinery.

India’s Ministry of Oil and Natural Gas, Indian Oil Corporation and Nayara Energy did not respond to requests for comment.

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