India ramps up Russian oil purchases, 33 million barrels set to arrive this month after US waiver

Indian refiners ramp up Russian oil purchases, 33 million barrels set to arrive after US waiver amid Gulf tensions

• Indian refiners ramp up Russian oil purchases after US waiver
• India to receive 33M barrels of Russian oil in March
• Gulf oil imports decline due to disruption at Strait of Hormuz

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Indian refiners have ramped up purchases of Russian crude, with 33 million barrels expected to reach India this month following the recent US waiver amid the escalating Iran war, which has seen the price blow past the $100 a barrel mark.

India got 29.17 million barrels from Russia in February, commodity analytics firm Kpler has said. It has since been scouting for alternatives as the Strait of Hormuz, through which almost 40 percent of its supplies pass, remains virtually blocked.

"Following the recent US waiver on certain Russian crude transactions, Indian refiners appear to be ramping up purchases of Russian crude. We are now seeing more crude oil tankers signalling discharge at Indian ports in the coming days, particularly those that were previously on the water without clear destinations,” said Nikhil Dubey, senior research analyst, refining and modelling at Kpler.

Of the 33 million barrels, Indian refiners have already purchased 10 million, while another 23 million are expected to load in the remainder of the month, Kpler AIS projection data shows.

This figure can change as destination patterns of more tankers become clearer, Kpler said.

While Indian refiners never stopped buying Russian oil, their appetite for these barrels reduced after the US sanctioned major oil producers Rosneft and Lukoil.

“The earlier US sanctions targeting major Russian oil companies complicated the supply chain around Russian barrels, effectively tightening the availability of unsanctioned barrels in the market,” Dubey said.

This also resulted in a reduction of imports of oil from Russia from its earlier high of 1.8 million barrels per day (bpd) in November to the range of 1.1-1.2 million bpd in January-February.

The US waiver broadens India's access to both sanctioned grades from Rosneft and Lukoil and non-sanctioned Russian crude, allowing Indian refiners to lift more oil from Russia, government sources told Moneycontrol.

India has been allowed to purchase Russian crude oil that was loaded on vessels until March 4 under a sanctions waiver issued by the United States, government sources said.

At the same time, EU restrictions on importing refined products made from Russian crude prompted some refiners to adopt self-restrictions, given their refined product export exposure to international markets, Kpler noted.

“The temporary waiver provides additional operational clarity by allowing transactions necessary to complete deliveries to India, even where parts of the broader supply chain had been impacted by sanctions-related restrictions, provided the cargo was loaded before the specified cut-off date,” Dubey said.

This should help secure crude supply at a time when flows from Hormuz are effectively stalled, he added.

The US treasury department issued a 30-day waiver on March 6, allowing Indian refiners to receive Russian crude oil shipments that were already in transit.

The Americans described the waiver as a measure to address disruptions in global supply chains triggered by the escalating West Asia conflict.

Russian crude trades at a premium to Brent

Russian crude, which traded at a steep discount since the start of the Ukraine conflict in 2022, is now commanding a premium of around $5 over the benchmark Brent crude as compared to a discount of $8-10 per barrel prior to the conflict.

Brent was hovering around $107 a barrel on the afternoon of March 9 after zooming past $110 earlier in the day, as the fuel assets come under fire in the widening West Asia war.

Crude cooled down on a report that G7 finance ministers will discuss a possible coordinated release of emergency petroleum reserves during the day.

Government sources also confirmed that Russian oil is no longer coming at a discount, increasing the costs for Indian refiners.

Roughly 130 million barrels of Russian crude are currently idling at sea, with significant volumes floating across the Indian Ocean, Red Sea, Suez Canal  and Singapore, which can be redirected to Indian ports if final commercial terms are finalised, Kpler said.

About 24 million barrels of Russian crude are currently floating near Indian shores.

Gulf oil imports set to decline

Crude imports from Gulf countries are expected to decline this month due to the disruption of the Strait of Hormuz.

India’s oil imports from Iraq have stood at 6.8 million barrels in March against 27.25 million bpd in February, Kpler data shows.

So far, India has bought 3.8 million barrels from Saudi Arabia against 28.4 million barrels in the previous month.

The US exported 1.06 million barrels this month, against 6.05 million barrels last month.

The Strait of Hormuz connects the Persian Gulf with the Arabian Sea and carries about 20 percent of global oil shipments each day, making it one of the world’s most important energy chokepoints.

For India, the world’s third-largest oil importer, nearly 40–50 percent of crude imports transit through Hormuz.