Flow of Russian crude oil to India tapered by a third after stringent US sanctions on two key suppliers came into effect on November 21 and is expected to decline further in December as Indian refiners look for alternative options.
The imports slumped to 1.27 million barrels per day after the sanction from an average of 1.8 million bpd earlier in the month. The November imports, compared with 1.5-1.6 million bpd of Russian oil flow in October, are expected to be a 5-month high, driven by increased imports before the deadline.
“Before November 21, imports were closer to 1.9-2.0 million bpd as buyers moved cargoes ahead of the deadline, after which volumes have slowed. It looks like refiners stocked up on crude ahead of the sanctions, planning to process it once the rules were in force,” said Sumit Ritolia, lead research analyst, refining & modelling, Kpler.
Post that, flows were tracking around 1.27 million bpd, down 570,000 bpd month-on-month. “Based on current loadings and voyage activity, we expect December arrivals to be in the range of 1.0 million bpd,” he said. “This aligns with our earlier view that, in the short term, Russian flows could ease toward around 800,000 bpd before stabilising.”
India, the world’s third-largest oil importer, emerged as the biggest buyer of discounted Russian crude after Western countries shunned Moscow following its February 2022 invasion of Ukraine.
Traditionally reliant on West Asian oil, India dramatically increased Russian imports as sanctions and reduced European demand made the barrels available at steep discounts, pushing its share from under 1 per cent to nearly 40 per cent of total crude imports. In November, Russia remained the country’s top supplier, accounting for more than a third of all crude oil imported.
But this could now change after US sanctions on Rosneft and Lukoil and their majority-owned subsidiaries took effect from November 21, effectively turning crude linked to these firms as a “sanctioned molecule”.
In effect, it also helped India to meet key demands of the US administration to cut down Russian oil purchases, enabling it to ease trade tensions. The Modi government is now hoping that the US would remove the 25 per cent penalty tariff on India at the least by the end of this month.
