Slight pause: India's crude oil imports from Russia decline in June

Indian imports of crude oil from the Russian Federation, which were 7 per cent cheaper than the Indian crude basket and 17 per cent less expensive than Saudi Arabian crude in May, hit a slight pause in June after reaching an all-time high in May, reveals trade and shipping data. India imported roughly 2.1 million barrels per day of Russian crude in June, down 2 per cent from 2.15 million barrels per day in May, according to data from Paris-headquartered commodity market intelligence firm Kpler.

But imports rose 87 per cent from June 2022 levels, four months after Russia launched an attack on Ukraine, roiling global oil markets.
 

State-run refiner Indian Oil Corporation (IndianOil) retained its place as the top importer of Russian crude, displacing Reliance Industries (RIL). IndianOil bought 17.3 million barrels in June, compared with 23 million barrels in May. RIL bought 14 million barrels last month, compared with 16.3 million barrels in May.Indian imports of Russian crude, which accounted for 45 per cent of its total crude imports in June, have sustained after strong backing from New Delhi, with state-run refiners powering imports of discounted crude.
 

Iraqi and Saudi Arabian shares came in at 18 per cent and 16 per cent, respectively, compared with 21 per cent and 14.5 per cent a year earlier. Saudi supplies to India
 

are sustained by traditional term contracts. “Based on current refinery configuration and capacity of plants to handle Russian crudes, the share of Russian oil is expected to be in this range,” observes R Ramachandran, an oil industry consultant. If a refiner wants to increase the processing of Russian crude, modifications and capital investments need to be made to the facilities, says Ramachandran, a former refinery director at state refiner Bharat Petroleum Corporation.

India paid around $70 per barrel in May for Russian crude on a delivered basis, according to Indian Customs data. Saudi crude averaged $84 per barrel, while Iraqi oil, India’s second-biggest supplier last month, cost $75 per barrel, the same as the average price of the Indian crude basket in May.  The basket has ignored Russian purchases in the past while calculating the country’s average rate, say industry officials.

The average discounts on delivered Russian crude average $8–10 per barrel, compared to European benchmark Brent crude, says an official from a state-run refiner.
 

For deliveries of Russian crude in May, Indian refiners typically place orders in March or early April. The price of Russian crude applies on the date of loading the oil for India. Brent averaged $78.4 per barrel in March and $84.6 per barrel in April, according to the US Energy Information Administration data.
 

Russian oil supplies exceeded the combined shipments of the next four biggest shippers — Iraq, Saudi Arabia, the US, and the United Arab Emirates — in June.
 

Supply from the US dropped to 7 million barrels in June, from 9 million barrels a year earlier. But purchases in June, when Prime Minister Narendra Modi visited the US, rose 75 per cent from May, shows Kpler’s ship-tracking data.
 

The share of the US in the Indian oil market dropped to 5 per cent last month, from 7.6 per cent in June 2021. Purchases from Russia averaged around 2.1 million barrels per day in June, predominantly of the Russian Urals, a medium-sour grade similar to the Gulf crude.
 

The Urals comprised 71 per cent of the purchases last month, up from 67 per cent in May.
 

India’s total crude imports totalled 4.7 million barrels per day in June, flat from May.
 

The Urals typically trade below a Group of Seven grouping-imposed price cap of $60 per barrel, calculated on a free-on-board basis. Most of the remaining grades, like the Sokol, Eastern Siberia–Pacific Ocean, and Varandey, are lighter, sweeter, and more premium grades and trade above the cap.
 

Indian state-run refiners insist that all their Russian imports trade below the price cap.