India’s Russian oil imports climbed to a 10-month high in May as low Russian refinery capacity use due to Ukrainian drone strikes made more of Moscow’s oil available for the export market, as per oil tanker tracking data and industry experts.
May also marked the fifth consecutive month of growth in India’s Russian oil imports.
May, however, saw subdued oil imports from Saudi Arabia despite no refinery maintenance activity in India.
May also marked a 10-month high in India’s oil imports from the United States (US)—New Delhi’s fifth-largest source of crude oil.
“India’s oil imports from the US mostly are of light sweet grades that are routinely blended with heavier barrels from Russia, Iraq, and Saudi Arabia.
India’s Russian oil imports climbed to a 10-month high in May as low Russian refinery capacity use due to Ukrainian drone strikes made more of Moscow’s oil available for the export market, as per oil tanker tracking data and industry experts. The rise in India’s import of discounted Russian oil over the past few months has hit flows from Saudi Arabia the most, the data shows.
Indian refiners imported a total of 1.96 million barrels per day (bpd) of Russian crude oil in May, the highest since July of last year, and nearly 3 per cent higher than volumes imported in April, as per provisional ship-tracking data from commodity market analytics firm Kpler. May also marked the fifth consecutive month of growth in India’s Russian oil imports.
INDIA’S OIL IMPORTS IN MAY Supplier Volume (thousand bpd) Russia 1959 Iraq 961 Saudi Arabia 546 UAE 355 US 210 Others 759 Total 4791 Source: Kpler
Oil imports from Saudi Arabia—India’s third-biggest source market for crude—declined almost 13 per cent sequentially to 0.55 million bpd, the lowest since September of last year. The primary reason for the decline is seen as the ample availability of Russian crude, which continues to maintain a price advantage over Riyadh’s oil.
Advertisement
“Russian refinery runs have been counter-seasonally low because of the Ukrainian drone strikes, so there was more crude going into the wider markets for exports,” said Viktor Katona, head of crude analysis at Kpler.
“The (Indian refiners’) decision to minimise imports (from Saudi Arabia) is solely a commercial one, reflective of the fact that there remains a $5-6 per barrel difference between the pricing of Saudi and Russian barrels. So, basically, it is direct displacement (of Saudi Arabian crude),” Katona said.
In September, when imports from Saudi Arabia were lower at 0.48 million bpd, the refinery maintenance season in India was in full swing, which meant that overall crude oil demand in the country was lower as some refineries were out of action. May, however, saw subdued oil imports from Saudi Arabia despite no refinery maintenance activity in India.
Supply of the medium-sour Urals crude—Russia’s flagship crude grade and the mainstay of India’s Russian oil purchases—to Indian refiners touched a record high in May at 1.53 million bpd, accounting for over 78 per cent of India’s Russian oil imports. Evidently, the price differential between Urals and competing crude grades from India’s traditional West Asian suppliers was significant enough for Indian refiners to prefer the Russian grade.
Advertisement
In terms of market share, Russia accounted for almost 41 per cent of the total 4.79 million bpd of crude oil imported into India in May. In terms of market share, Russia accounted for almost 41 per cent of the total 4.79 million bpd of crude oil imported into India in May.
May also marked a 10-month high in India’s oil imports from the United States (US)—New Delhi’s fifth-largest source of crude oil. Indian refiners imported a total of 0.21 million bpd of crude from the US in May, 4.5 per cent higher than the imports in April, and the highest since July of last year. The increase in import volumes from the US was evidently on account of American crude becoming relatively cheaper than comparable grades from West Asia.
“India’s oil imports from the US mostly are of light sweet grades that are routinely blended with heavier barrels from Russia, Iraq, and Saudi Arabia. Considering Dubai is now the strongest benchmark, trending higher than Brent for more than a month already, the arbitrage of relatively cheap US barrels into India is fairly open. The commercial advantage is there,” Katona said.
In terms of market share, Russia accounted for almost 41 per cent of the total 4.79 million bpd of crude oil imported into India in May. This is the second consecutive month of Moscow having a share of 40 per cent or more in New Delhi’s oil imports. Russia’s share had declined to around 33 per cent in the four months preceding April from the peak level of nearly 46 per cent seen in May 2023, the data shows.
India’s second-largest source of crude—Iraq—accounted for a fifth of New Delhi’s oil imports in May, while Saudi Arabia’s share was 11.4 per cent.
Advertisement
Prior to the war in Ukraine, Iraq and Saudi Arabia were the top two suppliers of crude oil to India. But as the West started weaning itself off Russian energy supplies following Moscow’s February 2022 invasion of Ukraine, Russia started offering discounts on its crude and Indian refiners started snapping up the discounted barrels.
As the world’s third-largest consumer of crude oil with a high import dependency level of over 85 per cent, India is extremely sensitive to oil prices. Although trade sources have indicated that discounts on Russian crude have shrunk considerably over the past months, Indian refiners have evidently remained keen on buying Russian oil as given the high import volumes, even lower discount levels lead to significant savings.
