(The opinions expressed here are those of the author, a
columnist for Reuters.)
By Clyde Russell
LAUNCESTON, Australia, April 26 (Reuters) - As Middle
East crude exporters cut output and raise prices, India's
refiners are successfully switching to Russian oil and enjoying
the double bonus of cheaper cargoes and higher margins for
exported refined products.
India's crude imports from Russia are expected to reach a
record high in April as Asia's second-biggest oil buyer
increasingly turns away from its traditional suppliers in the
Middle East.
Refinitiv Oil Research estimates that India will import 1.94
million barrels per day (bpd) from Russia in April, while
commodity analysts Kpler are more bullish, forecasting arrivals
of 2.39 million bpd.
India's total imports from the Middle East are estimated by
Refinitiv at 1.92 million bpd in April, meaning that for the
first time arrivals from Russia will exceed those from all
Middle East producers combined.
Iraq remains India's top supplier from the Middle East, with
April arrivals estimated at 840,000 bpd, with Saudi Arabia in
second place at 640,000 bpd.
Before Russia's invasion of Ukraine in February last year,
India was a minor importer of Russian crude, with Refinitiv data
showing average arrivals of about 44,500 bpd in the 12 months
from January 2021 to February 2022.
As Russian oil was increasingly sanctioned and shunned by
European buyers and some in Asia, such as Japan, the steep
discounts on offer led to India's refiners buying increasing
volumes.
By July last year, India's imports from Russia were up to
about 857,000 bpd, and they have steadily increased since then,
before sharply accelerating this year.
It's likely no coincidence that India's refiners have been
preferring Russian oil over Middle Eastern grades, which have
been becoming more expensive relative to most other crudes as
Saudi Arabia raises its official selling prices (OSPs).
Saudi Aramco, the kingdom's oil producer, raised its OSPs
for Asian clients for a third-straight month for May-loading
cargoes, taking the cost to a premium of $2.80 a barrel over the
regional Oman/Dubai benchmark.
Aramco's pricing moves tend to be followed by other Middle
East exporters, meaning that their crude now costs more on a
relative basis than not only Russian cargoes, but also from
producers such as the United States, which is outside the
Organization of the Petroleum Exporting Countries, and its
allies in the wider OPEC+ group.
INDIA DIVERSIFIES
While India's switch to Russian crude is certainly the
headline news, it is worth noting that the South Asian nation
has also been buying increasing volumes from the non-OPEC+
exporters.
Arrivals from the United States are estimated at 160,000 bpd
in April, up from 60,000 bpd in March.
India has also secured cargoes from Malaysia and Brunei in
recent months, having in the past only been a sporadic buyer
from the Southeast Asian producers.
The Middle East's share of India's imports likely dropped to
39.8% in April, according to Refinitiv, down from the 12-month
average of 56%.
The discount on Russian Urals grade crude has narrowed from
levels around $30 a barrel in the middle of last year to closer
to $10, but this still offers India's refiners a massive price
incentive, especially if they use the cheap oil to produce fuels
for export.
While the buying of Russian crude is fairly broad-based
among India's refiners, the biggest buyer is Reliance Industries , which operates a 1.24 million bpd refinery complex in
Jamnagar.
Kpler data shows that this complex is expected to receive
20.87 million barrels of Russian crude in April, or about 30% of
the total volume of India's imports.
The Jamnagar refinery is India's major export-orientated
plant, with Kpler data showing it is on track to ship 10.23
million barrels of diesel, about 83% of India's total exports,
and 4.94 million of gasoline this month, which is about half of
India's total.
The opinions expressed here are those of the author, a columnist
for Reuters.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
GRAPHIC-India's crude oil imports, total, Middle East and
Russia: ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Editing by Robert Birsel)
Messaging: clyde.russell.thomsonreuters.com@reuters.net))
