Recovery of Russian Oil Supplies to India in March 2023
After a decline due to U.S. sanctions, Russian oil imports to India rebounded in March, reaching 1.54 million bpd. This recovery has eased supply pressures and reduced prices for Middle Eastern crude. Freight costs increased, while discounts on Russian oil narrowed, allowing access to Western shipping services as India remains compliant with United Nations regulations.
In March, Russian oil supplies to India rebounded significantly after three months of decline caused by U.S. sanctions introduced on January 10. These sanctions targeted various entities in an effort to impede Moscow’s crude oil revenue. Reports indicate that Russian oil imports, predominantly of Urals crude, soared to 1.54 million barrels per day (bpd), recovering from a prior drop to between 1.1 and 1.2 million bpd.
The recovery in Russian oil supply has alleviated a supply crunch and brought down prices for competing Middle Eastern grades. Moreover, as Turkish sanctions curtailed imports to 127,000 bpd from 300,000 bpd, Asian markets have become more attractive for Russian suppliers.
Freight rates for vessels transporting oil from Russian western ports to India surged to $8 million, the highest in twelve months. This has not only incentivized more vessels to service the route but also pressured Russian oil exporters financially.
In terms of pricing, discounts on Russian oil have narrowed recently to between $2.60 and $2.80 per barrel against dated Brent for March cargoes destined for India. The price of Urals oil has been reported to fall below the $60 per barrel cap set by the Group of Seven nations, thus facilitating access to Western shipping services.
India maintains a cautious approach in its dealings with Russian oil, indicating a preference for transactions involving un-sanctioned vessels. As the world’s second-largest importer of Russian crude, India refrains from breaching United Nations regulations while navigating potential secondary sanctions from the United States that could impact its banking and corporate sectors.
The resurgence of Russian oil supplies to India in March marks a significant turnaround following earlier declines due to U.S. sanctions. As imports of Urals crude surged, freight rates increased, driving both competition and financial pressures on Russian suppliers. India’s cautious strategy reflects a focus on compliance with global standards while capitalizing on beneficial pricing dynamics in the oil market.
Original Source: www.news18.com
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