India’s oil imports from OPEC countries continue to decline significantly since Russian supplies increased following Moscow’s invasion of Ukraine in February 2022.
India’s imports of OPEC oil fell to an all-time low of 46% in April 2023, according to information reported by the energy freight tracker Vortexa and seen by the specialized energy platform.
In contrast, for the seventh month in a row, Russia maintained its position as the single largest supplier of crude oil to New Delhi, supplying more than a third of the total oil imported by India, according to The Economic Times.
India’s oil imports from OPEC
The Organization of the Petroleum Exporting Countries (OPEC) accounted for up to 90% of India’s total oil imports at one point, but these volumes have declined since Russian oil became available at a discount in the wake of Moscow’s invasion of Ukraine.
The share of OPEC, especially in the Middle East and Africa, amounted to about 72% of India’s total oil imports in April 2022.
This share decreased to 46% in April 2023; OPEC supplied India with about 2.1 million bpd of the total 4.6 million bpd the country imported last month.
“India’s imports of Russian oil in April set a new record again, but the monthly increase has slowed and is likely to peak in May,” said Serena Huang, Head of Asia-Pacific Analysis at Vortexa.
She added, “India’s oil imports from OPEC countries fell to 46% last month, down from 72% a year ago, the lowest level in several years.”
And she stressed that “OPEC may face an uphill battle to regain its market share, as refineries will eventually turn to crude oil that gives the highest margin, outside of fulfilling its fixed-term contracts.”
The following chart – prepared by the specialized energy platform – shows India’s oil imports from Russia, OPEC and other countries, from March 2020 to March 2022:
India’s oil imports from Russia
Indian refiners used to rarely buy Russian oil due to high shipping costs, but now they buy ample quantities of Russian cargo available at a discount compared to other crudes, as some Western countries rejected them because of Moscow’s invasion of Ukraine.
However, India’s oil imports from Russia now exceed its combined purchases from Iraq and Saudi Arabia, New Delhi’s two biggest suppliers in the past decade.
From a market share of less than 1% in India’s import basket before the start of the conflict between Russia and Ukraine in February 2022, Russia’s share of India’s oil imports rose to 1.67 million barrels per day in April, when it got a share of 36%.
Russian supplies rose slightly from the 1.64 million barrels per day of oil New Delhi imported last March.
Purchases from Russia in March amounted to twice the oil imported from Iraq, which is estimated at 810,000 barrels per day, after Baghdad was the largest oil supplier to New Delhi since 2017-2018.
Saudi Arabia fell to third place, with supplies amounting to 670 thousand million barrels per day of India’s total oil imports, according to information seen by the specialized energy platform.
The UAE – which in March overtook the United States to become the fourth largest supplier – sold about 185,000 bpd to India, higher than the 119,000 bpd exported by the United States.
competition for Russian oil
Russia is selling record quantities of crude oil to India to plug the gap in its energy exports, after the European Union banned imports in December 2022.
The European Union has imposed an embargo on Russian seaborne oil and set a price ceiling of $60 per barrel, which prevents other countries from using EU freight and insurance services unless oil is sold for less than the cap.
Industry officials said Indian refiners were using UAE dirhams to pay for oil imported at less than $60.
According to shipping data firm Vortexa, India imported just 68.6,000 bpd of oil from Russia in March 2022, and purchases this year jumped to 1.678 million bpd.
Increasing competition from China for Urals crude is likely to limit the positive aspects of India’s imports of Russian oil, according to The Economic Times.
Russian oil discounts
In a related context, the data from Refinitiv Eikon – issued last April – stated that the Urals crude shipments that were loaded in the first half of April mostly headed to the ports of India and China.
India accounted for more than 70% of Russia’s seaborne oil supplies last month, while China controlled about 20%, according to Reuters calculations.
Discounts to Urals averaged $13 a barrel less than Brent on a FOB basis in Indian ports, and $9 less than Brent in Chinese ports, according to information seen by the specialist energy platform.
While freight costs reached $10.5 per barrel and $14 per barrel, respectively, for shipments from Baltic ports to India and China.
This means that the price of the Urals on a FOB basis in Baltic ports was just over $60 a barrel in April, according to Reuters calculations.
related topics..
Also read..
Leave a Reply