Indian refiners set the stage for lower Russia crude oil purchase

Indian refiners accounting for more than half of the nation’s imports of Russian crude have paused buying for the coming months, reinforcing expectations purchases for December and January delivery will plunge. 

Indian processors, the top buyers of seaborne oil from Moscow, have been weighing up their options since US authorities blacklisted two of Russia’s largest producers, Rosneft PJSC and Lukoil PJSC, last week. 

Top importer Reliance Industries Ltd, which has a long-term supply contract with Rosneft signed only months ago, will no longer take Russian cargoes, according to a person with direct knowledge of its plans, who asked not to be identified as the information is private.  The conglomerate was already grappling with an incoming European Union ban on fuels made from Moscow’s oil. Mangalore Refinery and Petrochemicals Ltd, one of the smaller state-owned entities, said it paused all buying for now, citing the risk of secondary sanctions. HPCL-Mittal Energy Ltd, a joint venture between tycoon Lakshmi Mittal’s Mittal Energy and Hindustan Petroleum Corp Ltd, suspended further deals.  Combined, the three accounted for about 920,000 barrels a day of Russian crude imports in the first half of the year — or 52 percent of India’s total, according to data from analytics firm Kpler. That will now likely fall to zero, though the figure could change over time as other factors, including sanctions enforcement and the evolution of India’s trade talks with the US, become clearer.

   

Refiners are moving to fill the gap left by Moscow. Reliance went on an oil-buying spree last week, picking up at least 10 million barrels of Middle East and US cargoes to make up for the shortfall. MRPL purchased spot crude from Abu Dhabi.  State-owned Indian Oil Corp said earlier this week that the company was “absolutely not going to discontinue” purchases of Russian crude, but would comply with international sanctions. Bharat Petroleum Corp, another state-owned refiner, also expressed interest in buying some Russian crude in the current trading cycle. 

Reliance, MRPL, IOC and BPCL did not respond to requests for comment. 

Oiltanker with cargo from curb-hit Rosneft idles off Mumbai coast 

A tanker carrying a cargo of Russian crude from recently sanctioned Rosneft PJSC has been holding off Mumbai for a week amid intense scrutiny of Indian refiners’ purchases following the US curbs.

 

The Ailana reached the waters off the Indian commercial hub on October 24, and has been nearly stationary since then, with the cargo still aboard, according to ship-tracking data, as well as an industry executive and shipbrokers, who did not wish to be named discussing sensitive matters.

 

The Aframax-sized tanker hasn’t yet been scheduled to dock, port agents’ reports show.

 

The oil market has zeroed in on Russia’s export patterns, as well as Indian purchasing, after the US sanctioned Rosneft and Lukoil PJSC on October 22.