Indian refiners have reduced their purchases of Russian crude oil for delivery in November. This change has occurred due to increased competition from China as well as rising prices of Russian crude oil, particularly Urals crude. High prices have led Indian refiners to seek oil from other sources, especially the Middle East.
Increase in Russian Crude Oil Prices
According to reports, the price of Russian Urals crude loaded at the Baltic port has risen by more than $10 per barrel compared to Brent crude prices. This price increase has led Indian refiners to conclude that Middle Eastern crude is more economical. Additionally, some oil shipments are also being offered to independent Chinese refiners, which increases competition for Russian crude purchases.
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Decrease in Russian Crude Oil Share in India's Imports
Some informed sources have reported that the share of Russian crude oil in India's imports has decreased from 56% in July to about 35% in September. In the four weeks leading up to October 4, the average imports of Russian crude oil have dropped to 310,000 barrels per day, the lowest level since March 2022. This change is particularly due to the pressure of sanctions from the United States on India and the increasing threat of punitive tariffs.
While China and India remain the largest buyers of Russian crude oil, many shipments are only allocated after they begin their maritime journey to their final destination. This is particularly challenging for Indian refiners.
Renewed Growth of Oil Flows from the Persian Gulf
Meanwhile, oil flows from the Middle East have increased, especially following the rise in the number of tankers passing through the Strait of Hormuz. According to the CEO of Shell, the volume of these flows has reached about 80% of pre-war levels. These oils have become more attractive to Indian buyers due to shorter shipping times and lower transportation costs as tanker rates are rising.
India is recognized as a key market for Russian crude oil following Western sanctions that limited Russia's exports to Europe. This shift towards Middle Eastern crude could increase competition for these oils in the final months of the year.
Overall, India is significantly diversifying its oil sources and receiving more crude oil from the Middle East and the Americas. These changes reflect a transformation in the global oil market and its impacts on trade relations.
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