Russia became India’s fourth-largest oil supplier in April, with volumes set to rise further in the coming months as low prices boost demand from the world’s third-largest oil consumer and importer, tanker tracking data showed.
Russia’s share of India’s oil purchases rose to a record 6%, about 277,000 barrels per day (bpd) in April, up from about 66,000 bpd in March, when it ranked 10th, according to data provided by trade sources.
Indian Oil Corp., the country’s leading refiner, bought its first-ever Russian Arco oil shipment last month.
Western sanctions against Russia over its invasion of Ukraine have triggered a rare arbitrage flow, prompting Indian refiners to increase purchases of cheaper Russian oil, which many Western countries and companies are shunning.
“Russian Ural crude prices fell sharply due to sanctions against Russia, while Kazakhstan’s CPC crude blend came under pressure when it was loaded from a Russian port,” said Ehsan Ul Haq, analyst at Refinitiv.
Indians have bought stranded Russian oil, while some European buyers have bought larger quantities of African and US oil, he said.
African oil’s share of India’s total oil imports fell to about 6% in April from 14.5% in March, while the US’s share almost halved to 3%.
Grades from Azerbaijan, Russia and Kazakhstan together accounted for about 11% of oil imported by India in April, compared to about 3% in March. Wets Asia oil share increased from 68% to 71%.
India’s oil imports from Russia are likely to rise further to around 487,500 bpd in May as refiners ramped up purchases from Russia, preliminary data from Refinitiv Flows shows.
Over the past month, Iraq continued to be India’s top oil supplier, followed by Saudi Arabia and the United Arab Emirates.
In April, Indian refiners shipped 4.7 million bpd of oil, up 6.9% month-on-month and about 11.6% year-on-year as a second wave of COVID-19 hit local oil demand.
India’s April oil imports were strong as refiners tightened regulations to meet local demand and benefit from robust refining margins, Mr Haq said.
“In addition, the companies were getting Russian grades at very attractive prices and they had to raise the promised volumes under long-term contracts with Middle Eastern producers,” he said.
Higher imports from Russia dragged down OPEC’s share of overseas shipments to India in April.