India Is Drastically Cutting Back On Russian Oil Imports

There are several main reasons.

Indian refineries are cutting back on purchases of Russian oil for delivery in November. The main reasons are the rapid rise in prices for Urals crude and increased competition from China.

This was reported by Bloomberg.

The price of Russian Urals crude loaded in the Baltic Sea has risen to a premium of more than $10 per barrel relative to Brent. Whereas this grade used to be sold at a significant discount, its price has now nearly caught up with that of Middle Eastern grades.

Due to the loss of this price advantage, Indian refineries are forced to switch suppliers and return to crude from the Persian Gulf countries. At the same time, some of the Russian cargoes previously purchased by India are now being offered to independent Chinese refiners.

Competition with China and a Drop in Imports

The competition for Russian barrels has intensified due to the activity of Chinese buyers, which is partly linked to their reduced access to Iranian oil.

“The growth in China’s imports of Russian oil in recent months has intensified competition for these barrels, which would otherwise have been available to Indian refineries,” explained Sumit Ritolia, a senior manager at the analytics firm Kpler.

According to Kpler, Russia’s share of India’s oil imports fell to about 35% in September, although it had peaked at 56% back in July.

Average shipments for the four weeks ending October 4 fell to approximately 310,000 barrels per day, the lowest level since March 2022.

Alternatives from the Middle East and Sanctions Pressure

Against this backdrop, shipments to India from the Middle East continue to rise. According to Shell CEO Wael Savan, oil flows through the Strait of Hormuz have already recovered to approximately 80% of pre-war levels.

For Indian companies, Middle Eastern oil offers an additional advantage due to shorter logistics routes, which reduces transportation costs amid rising tanker freight rates.

The risk of U.S. sanctions or tariff measures also remains a significant factor for Indian refineries. At the same time, it is noted that the reduction in purchases is primarily due to the economics of the agreements, as Russian oil has lost its key price advantage over other suppliers.

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