Russia was poised to sell oil to India amid the oil and gas supply crisis caused by the ongoing war in the Middle East. Just as the US exempted India from sanctions on purchasing Russian oil, reports now emerge that Russia has deployed more than 15 million barrels of oil in the waters within India’s reach.
According to a Bloomberg report based on ship tracking data, this crude oil is present on more than a dozen tankers in the Arabian Sea and the Bay of Bengal. These cargoes are currently unsold, or the port at which they will be unloaded is unclear. Therefore, these ships could reach India within a week or less.
In addition, eight more ships carrying approximately 7 million barrels of Russian Urals oil are anchored near Singapore and could also reach India within a week. Additionally, several other shipments are heading eastward via the Mediterranean and the Suez Canal, which could reach India in less than a month.
Russia was India’s top oil supplier.
After the Russia-Ukraine war began in February 2022, India became a major importer of discounted Russian oil. However, due to US pressure, India significantly reduced these purchases recently, and in February, Saudi Arabia became India’s top oil supplier.
However, due to the ongoing war in the Middle East, oil imports from countries like Saudi Arabia and the UAE have declined significantly. Consequently, the US has granted India a one-month exemption to resume purchasing Russian oil.
Will buying Russian oil break all records?
Even before the US issued licenses to India, several tankers carrying Russian oil had already changed their destinations and started heading towards Indian ports. According to shipping data firm Kpler, approximately 18 ships are currently heading towards India carrying Urals oil.
At its peak, India was purchasing 2 million barrels of oil from Russia every day. In June 2023, India purchased a record 2.2 million barrels of oil per day from Russia. It is believed this record could be broken during the US discount period.
Sumit Ritolia, an analyst at a data intelligence company, says that refineries may soon increase purchases, and Russian oil imports could soon reach above 2 million barrels per day. He added that the steep discounts previously available on Russian crude oil may now be significantly reduced, and in some cases, even lead to a premium.
Due to India’s reduced purchases and China’s burden of excess supply, Russia’s premier Urals grade oil was previously selling at a steep discount to benchmark crude Brent. However, with India’s resumption of purchases and the shortages caused by the Middle East crisis, this trend could reverse, making Russian oil significantly more expensive.
Indian refineries have already purchased more than 10 million barrels of Urals oil in recent days. These cargoes are being offered at a premium to Brent, which includes freight and delivery costs. Prices have risen by about $12 per barrel compared to previous weeks.
