India’s Russian Oil Imports Rebound in March After Decline
In March, India’s Russian oil imports increased to 1.54 million bpd after a three-month decline, aided by non-sanctioned shipping and diverted supplies from Turkey. The increase helps alleviate supply shortages and lower prices for West Asian oil. Traders are adjusting to sanctions by utilizing Western ships, while Urals oil prices have fallen below the G7 price cap. India, the second-largest buyer of Russian oil, is carefully navigating the sanctions landscape.
In March, India’s imports of Russian oil witnessed a notable recovery, returning to approximately 1.54 million barrels per day (bpd), after declining to 1.1 million to 1.2 million bpd over the preceding three months. This resurgence is attributed to the use of non-sanctioned vessels for cargo deliveries and the diversion of certain supplies from Turkey, as indicated by multiple trade sources and shipping data. Consequently, the replenishment of Russian oil supplies is alleviating a supply crunch while contributing to a decrease in prices for competing West Asian grades.
The decline in Russian oil flow to India and China was significant earlier this year, resulting from US sanctions imposed on January 10, which targeted various stakeholders, including producers, insurers, and shipping intermediaries, with the aim of reducing Moscow’s oil revenue. The surge in oil freight rates for tankers traveling from Russian western ports to India reached a peak of $8 million for one-way trips, thus encouraging additional maritime services while imposing financial pressures on Russian oil sellers.
Additionally, the decision by Turkey’s prominent oil refiner Tupras to cease Russian oil imports has significantly increased the availability of these supplies for Asian markets, as Turkish imports dwindled to 127,000 bpd in March from around 300,000 bpd prior to the sanctions. Discounts on Russian oil have also adjusted, now ranging from $2.60 to $2.80 per barrel in comparison to dated Brent for cargoes loading in March for April delivery, contrasting with the previous month’s range of $2.50 to $3 per barrel.
Traders have communicated with Indian refiners their intent to utilize western ships for oil deliveries as a measure to circumvent the risk of sanctions. Furthermore, recent developments indicate that the price of Urals oil has dipped below the $60 per barrel cap established by the Group of Seven nations, thereby permitting access to western shipping services. As the second-largest importer of Russian crude, India has maintained a policy of procuring Russian oil exclusively from firms and vessels that are not sanctioned by the United States.
India emerged as the leading buyer of Russian seaborne oil, capitalizing on discounted prices following the imposition of Western sanctions on Moscow due to its military actions in Ukraine in 2022. Adhering to United Nations sanctions rather than those enacted by individual countries, India must navigate operational complexities due to the potential for secondary sanctions from the United States, considering the significant involvement of Indian banks and businesses in the US financial system.
In conclusion, India’s Russian oil imports have rebounded in March, overcoming a prior decline caused by US sanctions. The strategic shift in supply methods and the cessation of Turkish imports has facilitated this renewal. As India continues to prioritize purchasing oil from non-sanctioned entities, navigating the complexities of American sanctions remains crucial for maintaining its status as a leading importer of Russian oil during these challenging geopolitical times.
Original Source: www.business-standard.com
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