New Delhi: India’s crude oil import in August has come down drastically.
It has fallen by 20% last month, down from 120 thousand per barrel a day (kbd) to 4.45 million a barrel per day (mbd). This is due to a reduction in its controversial and much discussed oil import from Russia. The figures were put out by Vortexa, a London-based market intelligence provider.
India had imported 2.1 mbd from Russia in July 2023, but in August, it fell to the lowest amount in seven months, to 1.63 mbd.
“India’s crude imports in July reached a three-month high of 4.58 mbd. Strong domestic and exported crude oil demand had buoyed refiners to operate at high utilisation that month. In August 2023, lower crude imports from Russia saw the country’s total imports retreat. At least two refineries have shut down for planned maintenance, and several more are scheduled over this quarter and next,” Serena Huang, an analyst at Vortexa is cited as saying by The New Indian Express.
Traditional suppliers to India of crude oil, West Asia mainly, appear to be back in business. Saudi Arabia has re-emerged as a key supplier of crude oil to India. India’s crude imports from Saudi Arabia rebounded by 60% month-on-month to 840 kbd in August.
‘A depleting account’
It is believed that the reason for the drop in imports from Russia is “a depleting discount.” The discount on Russian oil is said to have fallen drastically from $15 a barrel to $5 a barrel.
“India’s imports of Russian crude were down 440 kbd in August to 1.63 mbd, and discounts on Russian Urals against dated Brent have narrowed on a FOB basis. Given higher dated Brent prices in recent weeks, this means that Russian Urals is now likely more expensive when sold on a DES basis to Indian refiners,” Serene Huang, analyst at Vortexa is quoted as saying.
Recently, Russia announced voluntary output cuts of 500,000 barrels a day in August and 300,000 barrels a day in September, mainly of Urals grade, according to Russian officials.
Russia overcame EU ban due to Indian imports
Indian imports of Russian crude have made global news, as they helped Russia ride out the difficulties that the EU ban on Russian oil imposed in December 2022 posed for it.
Data on the discharge volume by destination ports in India, according to Vortexa in January this year revealed that private refiners have led the increase in Russian crude purchases. Their “share of India’s crude imports from Russia increased from 40% during July-November last year, to 48% in December, rising further to 60% in January.”
The New York Times reported in June on the role of so-called certain ‘laundromat’ countries, “chief among whom was India, as well as China, Turkey, the United Arab Emirates and Singapore.”
It cited a report in April put out by the Centre for Research on Energy and Clean Air, a research group based in Finland.
“These ‘laundromat’ countries were ones that bought Russian oil, refined it into other products and sell it on to buyers in Europe, the United States and other jurisdictions that have halted direct purchases from Russia.”
Controversies in India over Russian Oil
Other than the role of private refiners cornering benefits of Russian oil imports, there was controversy over other aspects of Russian oil imports in India.
The purported use of the Chinese Yuan to foot the bill for it to dodge the sanctions raised eyebrows. Quoting a senior government official, Reuters reported that “Indian refiners have settled some payments for Russian oil imports in Chinese yuan,” even as the US dollar remains the dominant currency for such payments. There was no official denial of this report.
Then, Financial Times reported on a “mysterious Mumbai company” registered as an exporter on March 31 2023, which has grown into a giant of international oil shipping in the last 18 months. The company, Gatik Ship Management, “has purchased more oil tankers than any other company since Russia invaded Ukraine last year.”
