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India’s import of crude oil from Russia is set to dip in September and October, with the drop varying from 300,000 barrels per day (bpd) to 500,000, as the impact of muted cargo booking in the later half of July and the first half of August becomes visible.
This is against an average 1.7 million bpd last year.
The discounts offered on Russian oil had narrowed then amid looming tariffs of the United States (US).
Indian refiners subsequently switched to West Asia, West Africa, and the US to secure oil, leading to a spike in Dubai prices, induced by increasing tenders.
Dubai crude oil prices have risen $3.4 a barrel since August 18.
However, analysts say arrivals from Russia are likely to again pick up as Indian refiners have resumed tendering Russian oil purchases in the second half of August.
“Generally, ahead of Diwali, Indian refiners typically ramp up buying to cover festive demand. Technically, crude oil from Russia is a good alternative to expensive Dubai crude oil. Most importantly, economics is also favouring Russia oil as Urals are trading at a discount of around $4.85 a barrel to Dubai as of August 27,” said Priya Walia, vice-president, commodities markets (oil), Rystad Energy.
She also said the next few months could see more US West Texas Intermediate (WTI) crude coming to India owing to favourable economics and the need to manage tariff pressure.
“However, Indian refineries are configured for medium sour grades, which maximise diesel and middle distillate yields. As a result, India typically limits WTI purchases to 150,000-200,000 barrels per day, as processing WTI leads to excess lighter ends and less optimal refinery runs,” Walia said.
The impact of the 50 per cent tariff by the US will ultimately depend on the ability of the most affected sectors to pass on the cost to consumers, and the scope of negotiations to ease the levies.
“India will have to manage inflation one way or the other, either by paying more for the crude oil if it gives up on cheaper Russian barrels, or by bearing the burden of higher US tariffs on goods,” she said.
Another analyst said despite the heightened noise around the tariff and its impact, India continued to be a steady importer of Russian oil, particularly following the US’ statement in late July on enforcing secondary sanctions.
“While the cargo-tracking data may suggest ongoing inflows or short-term volatility, these movements need to be viewed in the context of commercial timelines and procurement cycles. As is often the case with oil flows, the underlying picture is more nuanced than headline charts imply,” said Sumit Ritolia, lead research analyst (refining, supply & modelling), Kpler, a research firm.
He said with US tariffs kicking in, India was unlikely to pivot away from Russian oil, which accounted for nearly 40 per cent of its import, but a more focused approach to diversification was expected for India to balance affordability and energy security.
