India is set to overtake China as the top importer of seaborne Russian crude in July as its refiners exploit cut-price sanctioned oil.
Four shipments were due to arrive in India this month — one more than in June and a vast increase on the single cargo in the previous three years, said energy data analyst Vortexa.
Researchers warned that the Russian oil could be reshipped in processed form to countries that have imposed sanctions on Moscow.
“China and India continue to haul in Russian crude from [the] seaborne market, with India likely to pass China to be the top importer in July,” said Emma Li, Vortexa’s China market analyst.
The surge in Russian crude imports by China and India has been a key feature of oil trading following the invasion of Ukraine in February.
The US has halted crude imports and the European Union has introduced a ban on seaborne Russian imports by the end of the year that it says will halt 90% of imports.
Sanctions are redrawing the tanker market as Western nations are forced to import crude over longer distances. But the moves, intended to punish Moscow and cripple its war effort, have had little impact on Russian volumes because Asian countries have picked up the slack.
The surge has prompted concerns that Russian-originated products are making their way from India, the world’s fourth-largest refiner, to countries that have imposed sanctions on Moscow.
India exported 2.7m barrels of refined fuels to the US on seven ships in June, but the origin of the oil was unclear, according to anti-corruption group Global Witness. Russian crude that has been “substantially transformed into a foreign-made product” is outside the scope of US sanctions, it said.
Oslo research company Rystad Energy said in an update last month that Indian imports of Russian crude from March to May were up 658% compared with 2021 levels.
It said Russian discounts have to remain high to give refiners a decent margin to offset higher insurance and freight costs. “For now, it is just pure economics that Indian and Chinese refiners are importing more Russian-origin crude oil for processing,” said Rystad’s Wei Cheong Ho.
Tracking crude flows
“Tracking what happens to Russian crude will be a challenge — Europe may end up importing petrol, diesel and other products from India that are blended with Russian Urals.”
Reuters reported that India’s crude imports from Russia increased to a record 950,000 barrels per day (bpd) in June. In April to June 2021, Russian crude to India stood at 22,500 bpd, it said.
India and China each imported 1.1m bpd of Russian crude from 1 to 25 July, according to Vortexa data, exploiting discounted rates that are as much as $40 per barrel less than oil sourced from the Middle East, the US and Africa.
The rise in Indian imports, with refiners receiving nearly 850,000 bpd from 1 to July 25, has been accompanied by a dip in Russian shipments to China’s state-run processors, according to Vortexa.
It said the world’s largest oil refiner, Sinopec, lifted only two cargoes in the month to 25 July compared with about 15 each in May and June, with Chinese independents picking up the rest.
India’s import supremacy is likely to be temporary: at least four fully laden VLCCs are destined for China in August.
