Amid fresh US sanctions against Russian oil, crude exports by Russia have been significantly higher to China than to India in March so far, according to data from commodity market analytics firm, Kpler.
Exports to China have surpassed exports to India for the first time since December 2023.
In the first 10 days of March, Russian crude oil loadings for India were at around 590 thousand barrels per day (bpd), much lower than 1.11 million bpd to China, Kpler data showed.
The lower supply of Russian crude oil to India could balloon New Delhi's oil import bill. Russia supplies crude oil to India at discounted rates.
India has been the biggest market for Russian crude oil given the country’s rising energy demand, contrary to the demand trend in other countries including China. For a clearer picture, Russian crude oil loadings for India were higher at 1.6 million bpd in February, compared to 1.1 million bpd for China.
Post the January 10 sanctions, the Indian oil marketing companies (OMCs) had confirmed that they are not accepting crude from sanctioned Russian oil entities, as reported by Moneycontrol.
India’s largest oil refiner Indian Oil Corporation Limited’s (IOCL) Chairman, A S Sahney, said in late January that the company was looking for “clean” Russian crude oil, implying that the entire chain including the supplier, insurance and the tanker should not be under sanctions. To avoid facing scrutiny over sanctions, state-run Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) have followed the same approach while securing Russian crude oil deals.
On January 10, the former US President Joe Biden imposed sanctions on Russian oil producers Gazprom Neft and Surgutneftegaz, on about 180 tankers shipping Russian oil, in an attempt to curb Moscow’s revenues that are being used to finance the war in Ukraine. The new sanctions were also an attempt to disrupt the shadow fleet of Russia.
However, Russian oil loadings for India could pick up later in the month. “In the first 10 days of March, loadings for India from Russia have been low. However, this could be a one-off event, and loadings may pick up in the coming months. This does not necessarily mean that loadings will remain low throughout the month,” said Sumit Ritolia, senior oil refining analyst, Kpler.
India- Russia oil trade
India has been buying a significant portion of its total crude oil requirements from Russia since February 2022. Around 30 percent of India’s crude imports come from Russia currently, compared to only 0.2 percent in 2022.
To secure a fixed supply, Indian state-run OMCs have been talking to Moscow for a crude term-deal as the companies buy Russian oil from the spot market. The OMCs, however, have not been successful in securing a term-deal as of now. BPCL told Moneycontrol in February that the company is seeking deeper discounts in the range of $5-6 a barrel on the purchase of Russian oil under a term-deal.
Even in the absence of a term-deal, Russia has become an important crude oil supplier to India. India has spent 112.5 billion euro (about Rs 1.5 lakh crore) on buying crude oil from Russia since the start of the Ukraine war, according to a recent report by the Centre for Research on Energy and Clean Air (CREA). China made crude oil purchases worth 170 billion euro from Russia in the period.
India and China have been the primary destinations for Russian crude oil since war broke out between Ukraine and Moscow in 2022. However, India has overtaken China for receiving Russian crude oil amid Beijing’s decline in oil demand growth, until now.
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