India’s crude oil imports from its traditional source, the Middle East, have been inching up in the last six months, since the US Office of Foreign Assets Control (OFAC) began sanctioning vessels transporting Russian crude oil above the coalition-agreed price cap of $60 a barrel in October last year.

According to energy intelligence firm Vortexa, Indian refiners topped up on crude oil cargoes from Iraq, the UAE and Qatar last month amidst tightening tonnage supply available for moving Russian cargoes on non-sanctioned vessels.

Vortexa’s Head of APAC Analysis, Serena Huang told businessline that despite the decline in Sokol imports, Indian cargoes of Russian crude totalled 1.36 million barrels per day mb/d in March, up 7 per cent m-o-m. However, on an annual basis shipments fell by almost 19 per cent.

Trade sources and refiners said that Russian shipments, except Sokol, have not witnessed much resistance. However tightening restrictions on freight compliance could skew supply dynamics going ahead. Also, it needs to be seen how logistics will pan out with Indian refiners negotiating term deals with Russians.

Growing shipments

On the other hand, India imported 1.09 mb/d of crude oil from Iraq, higher by 39 per cent m-o-m and 30 per cent y-o-y. This is the second time in the 2024 calendar year (CY) that Iraqi shipments have surpassed 1 mb/d after importing 1.18 mb/d in January 2024.

India also sourced more crude from Qatar and the UAE. Shipments from Qatar were up 18 per cent m-o-m and 26 per cent y-o-y to 45,000 b/d. While, cargoes from the UAE rose 42 per cent m-o-m and 38 per cent y-o-y to 4,42,000 b/d.

However, shipments from Saudi Arabia, India’s third largest supplier, fell by 8 per cent m-o-m and 21 per cent y-o-y to 7,68,000 barrels per day (b/d).

“Indian refiners are likely turning towards more Middle East crude if they are unable to secure the previous volumes of Russian crude that they have been importing,” Huang said.

As per Vortexa data, Russia accounted for roughly 28 per cent of India’s cumulative imports of 4.89 mb/d last month. Middle Eastern suppliers Iraq, Saudi Arabia, the UAE, Kuwait, Oman and Qatar collectively accounted for 48.3 per cent. In February 2024, Russia accounted for 31.8 per cent of total shipments, while Middle East’s share came at 47.1 per cent.

In January 2024, the share of Middle Eastern suppliers rose to around 51 per cent of India’s total crude imports of 4.85 mb/d, whereas Russia accounted for roughly 27 per cent.

Sourcing tankers

Huang pointed out that Indian refiners have “almost completely” halted imports of Sokol, likely due to concerns of repercussions from the US sanctions. In recent months, majority of Sokol was transported on vessels controlled by Sovcomflot or Sun Ship Management, of which Sovcomflot is a beneficiary.

“Several Indian refiners are reportedly in the midst of negotiating term deals with Russia and the outcome could have a significant impact on the outlook of India’s imports of Russian crude. We are also seeing a trend of tightening tonnage supply available for moving Russian crude on non-sanctioned vessels. More EU operators are leaving the Russian crude trade, and with growing sanctions on shipping companies carrying Russian crude above the price cap, there is a risk that logistics could become a constraint on Russia’s crude exports to India,” she anticipated.

Vortexa’s Head of Market Intelligence & Analysis (MENA), Jay Maroo, in a March 27 report, said that for India there is ongoing uncertainty over whether crude imports from Russia will fall due to self-imposed financial/legal restrictions. Indian refiners are reportedly no longer taking cargoes on Sovcomflot tankers, though this may not make a large volumetric impact, it does suggest a change in tone from the previous approach.

For Russia, extensive damage to downstream infrastructure after numerous attacks has curbed refinery throughput and could potentially “free up” crude for export. However, in the current environment of tightening restrictions on freight/sanctions compliance, there may be difficulties in maintaining exports at current levels (around 3mb/d), he added.