Russian crude flow to India declines in Aug, Iraq improves market share

India's overall crude imports declined by around 6.6 per cent in August month-on-month to 4.5 million bpd, but the reduction in Russian shipments was more than twice as large

Shipments of Russian oil to India declined by 14 per cent in August from July, after a prolific run of three months of near record purchases by Indian refiners, as savings on the crude declined to record lows after Russian traders refused to offer higher discounts, according to industry sources and ship tracking data.  

Iraq, India's biggest oil supplier prior to Russia's inroads, improved its market share in India at the expense of Russia on the back of lower rates.

The share of Russian oil in India’s crude basket also dipped by more than three percentage points in August from July at below 40 per cent, according to calculations by Business Standard based on ship tracking data. Iraq's share increased by around 2.4 per cent during the period.

''I would consider a drop from 43 per cent to 40 per cent for Russia's share well within the range of fluctuation we have seen in previous months, and not particularly remarkable,'' said Vandana Hari, a Singapore-based energy expert and founder of Vanda Insights. 

''Given that nearly all of Russian crude to India is bought on a spot basis, the prevailing discounts being offered are and will remain a key determinant in how much volume the Indian refiners pick up,'' Hari said.

 

Indian refiners led by Reliance Industries and Indian Oil imported 1.8 million barrels per day (bpd) of Russian grades in August, compared to 2.1 million bpd in July and 1.54 million bpd a year earlier, according to data from Paris-based market intelligence agency Kpler accessed by Business Standard. Imports of Russian oil averaged 2 million bpd in the May-July period.

While India’s overall crude imports declined by around 6.6 per cent in August from July to 4.5 million bpd, the de-growth of Russian shipments was over twice the magnitude, eroding Russia’s share in India’s crude imports basket to 40 per cent from a near record 43 per cent in July. There has been a greater draw on Russian oil from domestic refiners, leaving less for exports in August, industry officials said.

The share of Iraqi crude increased to around 19 per cent in August from a little over 16 per cent in July. Average Iraqi crude prices are trending lower on a delivered basis to Indian buyers. But Iraqi grades, while well suited for Indian refineries, are of a lower quality in terms of sulphur content than Russian grades.

For instance, Iraqi oil averaged $597/tonne in the April-June quarter compared to $609/tonne for Russian oil during the period, according to Indian customs data. Savings on Russian oil may have declined to record lows in the April-June quarter of 2024-25 fiscal at around $440 million compared to around $1.2 billion in average quarterly savings in fiscal 2022-23 and 2023-24.

Saudi Arabian supplies to India declined by 17 per cent on the month and by over a third on the year to around 550,000 bpd in August, shipping data show, as higher rates kept buyers away, Indian refining officials said.

Purchases from the US increased by 41 per cent to 370,000 bpd in August from July and more than doubled from a year earlier as India has tried to maintain a balance between buying Russian crude and mollifying American concerns by increasing purchases of US crude, industry sources said.

The Russian invasion of Ukraine in February 2022 sparked a wave of sanctions and discounts by western powers and Russian suppliers, which were eager to find a market for their sanctioned oil. Discounts have now settled in the $3.5-$4/bbl range this year, two refiners told Business Standard, from $15/bbl levels observed in early 2023.

Typically, Reliance Industries and Indian Oil are the two biggest purchasers of Russian crude accounting for a combined 40 per cent of Russian oil purchases followed by Russian Rosneft-owned Nayara Energy and state-run refiner Bharat Petroleum. Russian oil accounted for around 40 per cent of Bharat Petroleum’s purchases in the latest quarter compared to around 30 per cent in the previous quarter, according to comments by company officials on earnings calls.