Russia has become India’s largest crude oil supplier, with 1.96 million barrels per day (mb/d), of the key commodity surpassing the traditional trading bloc, Middle East, for the first time in May this year.
The Middle Eastern nations — Iraq, Saudi Arabia, the UAE, Kuwait, Oman and Qatar — cumulatively supplied the world’s third largest energy consumer with around 1.81 mb/d last month, data provided by the energy intelligence firm, Vortexa showed.
“Russia has surpassed the cumulative share of Middle Eastern suppliers for the first time in May, and could remain the top supplier for a while,” Vortexa’s Head of APAC Analysis, Serena Huang told businessline.
Russian Urals crude is priced more attractively than the conventional Middle Eastern or Atlantic Basin grades, which continue to be a strong appeal for Indian refiners, she added.
Middle East Vs Russia
The Middle East accounted for 69 per cent share of India’s total crude oil imports in April 2022, which declined to 44 per cent during April 2023. This share has gone further down during May 2023.
During May 2023, Russia remained India’s top crude oil supplier for the sixth consecutive month, compared with Iraq at 839,000 barrels per day (b/d), Saudi Arabia (560,000 b/d), the UAE (203,000 b/d), Kuwait (168,000 b/d), Oman (22,000 b/d) and Qatar (14,000 b/d).
When asked about Middle East’s response to losing barrels to Russia, Huang said, “India’s imports of Iraqi crude have been kept relatively flat in May. Lower imports of Saudi Arabia crude by India has been compensated by higher imports into Japan, Malaysia and Taiwan among other countries.”
During May, India’s crude oil imports from Russia were largely of the Ural grade. India imported 1.4 mb/d of the Ural grade during May 2023, followed by ESPO blend (193,000 b/d), Sokol (187,000 b/d), Varandey (155,000 b/d) and Siberian Light (25,000 b/d).
The share of private refiners, Reliance Industries (RIL) and Nayara Energy, fell to 40 per cent in May from 46 per cent of the total imports from Russia in April 2023. In March, private refiners accounted for around 50 per cent of the total in-bound shipments of the key commodity.
This has been attributed to the decline in exports of refined petroleum products, particularly diesel to Europe due to lower demand. However, trade sources expect the exports to appreciate in the second half of the 2023 calendar year.
When asked whether Russia’s share in India’s crude oil imports will stabilise at around 1.7-2 mb/d, Vortexa’s Huang said, “India’s imports of Russian crude continue to test new highs, reaching almost 2 mb/d in May. Refiners have tested and gained confidence in processing Russian crude. But their voracious appetite for Russian crude can only grow as much as they have room to back off spot crude purchases.”