Indian refiners are snapping up Russian oil after US waiver

There’s around 15 million barrels of Russian crude on tankers in the Arabian Sea and the Bay of Bengal, while vessels carrying another 7 million are idling near Singapore

• Indian refiners buy over 10 million barrels of Russian oil
• US waiver prompts MRPL and HPCL to resume Russian oil purchases
• India's Russian oil imports may exceed 2 million barrels daily

Did our AI summary help?

Indian refiners are moving quickly to buy Russian oil, with million of barrels floating in Asian waters offering a quick fix to a Middle East supply crunch after the US relaxed restrictions on the trade.

More than 10 million barrels of Russian crude have already been bought, according to people with direct knowledge of the deals. Much of that may have been purchased even before the one-month waiver announced late Thursday in Washington.

There’s around 15 million barrels of Russian crude on tankers in the Arabian Sea and the Bay of Bengal, while vessels carrying another 7 million are idling near Singapore, according to ship-tracking data compiled by Bloomberg. All of that crude could reach Indian ports within a week. There’s also more tankers with the oil in the Mediterranean Sea and Suez Canal that are heading toward the subcontinent.

The South Asian nation, which became a major importer of discounted Russian oil following the invasion of Ukraine, had sharply cut back on the purchases this year under US pressure. But the war in the Middle East has cut off its access to replacement supplies from Persian Gulf producers, prompting Washington to give it a short-term reprieve.

State-run refiners Mangalore Refinery and Petrochemicals Ltd. and Hindustan Petroleum Corp Ltd. — which hadn’t purchased Russian oil since December — are back in the market, according to the people, asking not to be named as they’re not authorized to speak to media.

MRPL and HPCL didn’t reply to emails seeking comment, while India’s federal oil ministry didn’t immediately reply to an mail seeking comment on the US waiver.

Tankers laden with Russian oil had begun changing their destinations to signal Indian ports even before the license was issued. At least 18 vessels carrying Urals are now indicating they’re heading to India, according to Kpler.

“Refiners could quickly ramp up purchases again, potentially pushing volumes back above 2 million barrels a day in the near term,” said Sumit Ritolia, an analyst at the data intelligence firm. “The steep discounts previously seen on Russian crude could narrow significantly and may even shift toward premiums.”

That appears to be already happening. Indian refiners are paying a $2-to-$4 a barrel premium to Dated Brent for Russia’s flagship Urals grade on a delivered basis, according to the people. It’s a sharp turnaround from last month, when it was going for $15 to $20 a barrel below Brent as buyers in the South Asian nation pulled back on purchases.

The resumption in Indian buying could see the country’s imports from Russia rise back toward the peak of more than 2 million barrels a day in mid-2024. Purchases last month had dropped to an average of 1.06 million barrels a day, the least since September 2022, according to Kpler.