Refiners in India, which in the past rarely bought Russian oil, because of high transport costs, have emerged as key oil clients for Russia, snapping up crude rejected by Western nations since the invasion of Ukraine in February 2022.
Indian refiners mostly buy African oil through spot tenders. However, the nation’s thirst for African oil has been dampened by easier availability of Russian oil sold at deep discounts.
More than a third of India’s total 4.94 million barrel per day (bpd) oil purchases last month came from Russia. In the past few months Moscow has replaced Iraq as the top oil supplier to India, the world’s third-largest oil importer and consumer.
India received a record 1.72 million bpd of Russian oil last month, the data showed.
Oil from CIS nations – Russia, Kazakhstan and Azerbaijan – accounted for a record 38.3% of imports in February, while the share of African nations declined to 3.6%, the lowest in records going back to 2001, the data showed.
“India’s intake of Russian low-sulphur grades like Sokol increased last month and that displaced purchases of sweet grades from west Africa,” said Ehsan Ul Haq, analyst with Refinitiv. Indian refiners are importing low sulphur oil such as Sokol and ESPO, sold at above the $60 a barrel price cap fixed by the western economies, in non-dollar currencies as their landed price is still cheaper than the rival grades from Africa.
European nations had lifted purchase of middle distillate-rich African oil as Europe’s diesel stocks were running low, Haq said.
Europe’s distillate stocks were below the 10-year average at the end of January.
Also, Indian refiners appeared to have increased oil purchases from producers in the Middle East under their yearly contracts to meet contractual obligations, he said.
India’s imports of Iraqi oil in February rose by 5.3% from January to reach an eight-month high of 1.03 million bpd, the data showed.
In the first 11 months of this fiscal year, from April to February, Iraq continued to be the largest oil supplier to India while Russia overtook Saudi Arabia to take the second spot, the data showed.
Higher purchases of Russian oil dragged down Indian crude imports from member nations of Organization of Petroleum Exporting Countries (OPEC) to the lowest level in the 22 years of records.
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