India’s oil imports from Moscow have remained healthy in August so far signalling refiners’ leaning towards Russian crude despite sharp decline in discounts from the country.
In the month so far, Russian oil purchase by India has remained strong at 1.8 million barrels per day (bpd), higher than total June purchases by refiners, shows data from Kpler, a global real-time data and analytics provider. June oil imports from Russia were at 1.6 million bpd.
August oil import data, however, does not reflect current purchase strategy of Indian refiners amid the US government’s decision of imposing penalty on New Delhi for buying Russian oil as barrels reaching Indian shores in the month would already have been booked in June or earlier.
“Russian crude imports into India haven’t shown a notable decline so far because August import volumes were largely secured and fixed back in June/ July before any recent market or policy developments. As a result, short-term data reflects earlier buying decisions rather than real-time reactions,” said Sumit Ritolia, lead research analyst, refining & modelling at Kpler.
Any impact from new restrictions or shifts in trading conditions is more likely to surface in September end to October arrival figures.
On August 6, the US President Donald Trump imposed penalty—an additional 25 percent tariff on goods—on India for buying Russian oil. In response to the levied penalty, the Indian government had said that the country would prioritise national interests and safeguard economic security.
Meanwhile, Moneycontrol had reported that the Indian refiners have received no government directive to halt Russian oil supplies amid latest tariff imposition on the country.
A Kpler analysis shows that in absence of Russian barrels, India would need to turn to Middle Eastern grades, which are currently trading at a premium—at least $3–5 a barrel higher. In replacing the current approximately 1.8 million bpd of Russian oil, India would incur a $3–5 billion annual increase in import costs under current flat crude oil prices, said Kpler.
Indian refiners continue to heavily rely on Russian oil despite a sharp decline in discounts from the country. According to industry sources, discounts have fallen to $1.5-$2 per barrel currently on Russian oil, as compared to $13-$14 a barrel in 2023. However, even a $2 per barrel discount on crude oil purchase from Russia translates into significant margin boost for Indian refiners.
In August, Indian refiners ramped up oil imports from United Arab Emirates (UAE) to 987,000 bpd—highest from the country in at least two years—showing New Delhi’s strong focus on diversification. India imported 448,000 barrels of crude oil from UAE in July.
There is also an uptick in oil imports from US into India to 404,000 bpd in August, compared to 364,000 bpd in the previous month. Meanwhile, oil supply from Iraq and Saudi Arabia has remained healthy in August so far at 655,000 bpd and 744,000 bpd, respectively.
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