Daijiworld Media Network - New Delhi
New Delhi, Nov 1: India's crude oil imports surged to a record high of around 5.6 million barrels per day (bpd) in October, as refiners increased purchases from West Asia and Russia despite continuing geopolitical tensions, according to data from energy intelligence firm Kpler.
West Asian supplies accounted for approximately 2.3 million bpd, while Russian crude shipments remained strong at around 2 million bpd, Kpler lead analyst Nikhil Dubey said in a post.
Increased ship-to-ship transfers helped move more crude through the Strait of Hormuz, supporting a recovery in Gulf supplies during September and October and providing Indian refiners with greater flexibility in sourcing.
However, Russian shipments could decline in November and December as attacks in the Black Sea push up freight rates, making Russian crude less competitive in terms of landed costs. Meanwhile, Gulf suppliers are offering competitive delivered prices to regain their market share in India, Dubey said.
He cautioned that any fresh disruption to shipments through the Strait of Hormuz could prompt Indian refiners to turn again to Russian crude, even if transportation costs increase.
The October 16 waiver under the Graham Act could also ease concerns among some Indian buyers over the risks associated with purchasing Russian oil, providing refiners with greater flexibility in procurement, he added.
India imports nearly 90 per cent of its crude oil requirements, making the availability and landed cost of alternative supplies crucial to refinery economics. The choice between Russian and West Asian crude is therefore expected to remain driven largely by commercial considerations and supply security.
Russia's invasion of Ukraine in February 2022 significantly disrupted global oil trade flows, prompting Western countries to impose sanctions, including an European Union ban on seaborne Russian crude and a G7 price cap.
With European buyers reducing purchases of Russian oil, Moscow offered substantial discounts to attract alternative markets. India emerged as a major buyer, increasing Russian crude imports from negligible levels before the war to as much as 40-50 per cent of its total crude basket at their peak.
Indian refiners were attracted by the price advantage, with Russian Urals crude at times trading around USD 30 per barrel below Brent in late 2022 and early 2023. This transformed Russia into one of India's largest crude suppliers as refiners prioritised lower landed costs and supply security.
Although the discounts have now narrowed considerably, disruptions to supplies from the Middle East have encouraged Indian refiners to continue purchasing Russian crude.
Dubey reiterated that Russian flows could soften towards the end of the year due to rising freight costs, while the recovery in shipments through the Strait of Hormuz has provided India with more sourcing options. However, renewed disruptions in the region could once again make Russian supplies more attractive despite higher transportation expenses.