India’s spot purchases of crude oil from the Middle East have fallen in recent months, as cheaper Russian spot barrels are making their way to the world’s third-largest crude oil importer, according to the head of the largest Indian refiner.
“Spot purchases have gone down because somewhere there has to be a dip to make up for all the Russian purchases,” Shrikant Madhav Vaidya, chairman of Indian Oil Corporation, said at the Middle East Oil and Gas Conference in Dubai on Monday, as carried by Reuters.
Indian Oil, the largest refiner in the country by capacity, is committed to its term deals with Middle Eastern producers, but spot purchases from the Middle East have dropped amid Russian competition, he said.
Rising Indian oil consumption has opened more room for crude oil imports while Russia’s oil is suited for Indian Oil refinery specifications, Vaidya added.
India, together with China, is now a top market for Russian crude oil after the EU and the G7 introduced embargoes and price caps on Russian oil exports.
Over the course of one year since the Russian invasion of Ukraine, India turned from a marginal buyer of Russian crude to the most important market for Moscow’s oil alongside China. Indian refiners, not complying with the G7 price cap and looking for cheap opportunistic purchases, have snapped up many of the Russian Urals cargoes, which used to go to northwest Europe before the EU embargo.
Record imports of cheap Russian crude into India have undermined OPEC’s share of supply to the world’s third-biggest crude importer so much that OPEC’s share of all Indian oil imports has hit the lowest in at least 22 years.
As India’s imports of Russian crude surged in the past year, OPEC’s share of Indian oil supply slumped to as low as 59% in the Indian financial year ending March 2023, compared to as much as 72% in the previous fiscal year 2021/2022, according to a Reuters analysis of data from industry sources.
By Michael Kern for Oilprice.com