According to refinery executives, India’s oil processors are willing to buy even more Russian crude if the price is right, possibly giving Moscow a larger outlet over the next year after its invasion of Ukraine.
The South Asian country increased its Russian oil imports in 2022, finishing the year with record monthly amounts due to cheap barrels. According to executives, additional inexpensive oil may be available to India as early as early next month, with a European Union restriction on seaborne Russian fuel exports potentially dragging on refining rates in the biggest OPEC+ producer.
After many other countries refused to accept Russian oil exports owing to the conflict in Ukraine, India and China have emerged as critical destinations. Indian refiners may convert inexpensive Russian oil into fuels like diesel and sell it to markets like Europe, increasing their profit margins. The looming EU penalties are projected to increase demand for Asian fuels.
“It’s a bit of a circular trade going on as India takes Russian crude that Western buyers don’t want and refines it into products for resale to the West,” said Mukesh Sahdev, the head of downstream oil trading at Rystad Energy.
India’s oil imports hit a new high last year, despite higher purchases of Russian barrels crimping OPEC shipments. From April to December, cartel members were responsible for about 62% of all oil imports, compared to about 71% during the same time period the year before.
Executives from the refineries said that Indian processors would continue to get long-term supplies from places like Saudi Arabia, and that any increase in imports from Russia would be ad hoc and happen when it made sense.
According to Kpler statistics, Russian fuel oil flows to India nearly doubled month over month in December to more than 137,000 barrels per day. The product can be used to upgrade other, more valuable fuels or to generate electricity.
