India’s crude oil imports during February 2024 declined by 6.6 per cent Y-o-Y and 16 per cent M-o-M to 18 million tonnes (m.t.), the lowest since September 2023.

The steep monthly decline follows the record high registered in January. India imported 21.4 m.t crude oil in January—the highest in the last 20 months—as refiners topped up cargoes to meet domestic consumption and take advantage of rising demand for refined products in export markets.

Besides, the inbound cargoes would have been much lower had Sokol shipments not resumed last month. India imported around 97,229 barrels per day (b/d) of Sokol last month, as per Kpler, after availing zero shipments of the sweet crude in December 2023 and January 2024 due to payment and sanction issues.

Comparing crude oil cargoes for February in the last ten years, ending 2024, shows that shipments last month were the third highest since 2015. The highest shipments were recorded in February 2023 at 19.3 m.t followed by February 2020 at 18.6 m.t

Also, during February 2023, import volumes from Russia were higher due to high discounts, with the erstwhile Soviet Union accounting for around 40 per cent of India’s total crude oil imports, making it the largest seaborne crude supplier to the world’s third-largest importer of the fourth straight month.

Crude oil prices also inched up monthly during February 2024. The price of Brent Crude averaged at $83.93 per barrel (bbl) in February, against $80.32 a bbl during in January and $82.49 in February 2023. Indian basket’s price averaged at $81.62 a bbl in February 2024, against $79.22 in January 2024 and $82.28 a bbl in February 2023.

Russian imports

It remains to be seen how imports from Russia will fare in the coming months amidst several developments. The drone attacks on Russian refineries are expected to spare barrels for exports.

However, this development comes amidst rising US and Western nation sanctions on ships ferrying Russian crude, particularly the shadow fleets. Besides, shippers avoid the Red Sea route, while favouring the Cape of Good Hope (COGH), leading to higher travel time and costs.

Besides, discounts on Russian crude have been inching south. Quoting the Centre for Monitoring Indian Economy (CMIE), JM Financial, in a March 17 report, said that the discount on Russian crude to India declined M-o-M to around $2 per barrel in January 2024, compared to $4 in December 2023, and far lower than the discount of $6-10 a barrel in H1 CY 2023.

However, Russia’s share of India’s crude imports recovered to around 38 per cent in January against around 36 per cent in December 2023. This is still lower than the 40-45 per cent in May-August 2023 but significantly higher than the 20 per cent in December 2022 and the 1-2 per cent pre-Ukraine conflict, the brokerage added.

The growing obstacles to importing crude oil from Russia at lower prices could bounce in favour of India’s traditional suppliers Iraq and Saudi Arabia. March will be a crucial month for observing India’s barrel trade with the Middle East and Russia, trade sources said.

When asked about the impact of the above scenarios on Russian imports, Kpler’s Lead Crude Analyst Viktor Katona told businessline “I generally don’t see US sanctions derailing Russian exports to India, however they would most probably make Russian barrels cheaper because Indian refiners now have a strong argument to use vis-à-vis Russian exporters. So delivered Urals differentials could slide to -$5 per barrel to Brent, especially as lower refinery runs in Russia have led to higher crude exports from March onwards.”

He pointed out that Russian crude oil flows to India have found a new equilibrium in the 1.5-1.6 million barrels per day (mb/d) range. India imported 1.54 mb/d of crude from Russia in February 2024.