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Indian refiners maintain buying momentum for Russian, Iraqi crude as Saudi cargo prices soar

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Indian refiners maintained their purchase momentum of medium acid crude oil from their two biggest trading partners, Russia and Iraq, in May 2024 as crude inflows from Saudi Arabia, another major supplier, declined due to higher prices.

The arbitrage trade has given Russia about a $5 a barrel advantage over Saudi Arabia, analysts and industry sources said. The world’s largest oil exporter has been raising its official selling price (OSP) for Arab Light, a moderately acidic crude, to Asia for three consecutive months through June in a bid to tighten oil markets.

India imported more oil from Russia, Iraq, the UAE and the US last month compared with April 2024, according to energy information firm Vortexa.

Russia remains on top

Crude oil imports from Russia decreased slightly to 1.72 million bpd on a monthly basis in May 2024 (April: 1.75 million bpd), down 13% year-on-year. Urals shipments were at 1.44 million bpd last month, compared to 1.56 million bpd in April 2024.

Selena Huang, head of APAC analytics at Vortexa, said: Business Line, “Russia continues to be India’s largest crude oil supplier in May. Imports of Russian crude oil have declined slightly compared to April, but May volumes are still the second highest compared to July last year.”

A domestic refiner said price was a big factor, with Russian crude remaining profitable compared to Saudi Arabian crude. “The Russian-Indian crude trade is a business opportunity that cannot be ignored by either side. It is going well despite issues with payments and shipping. This shows the inherent value of the crude trade for both sides,” the source explained.

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Huang noted that with India and China being key export markets and no alternative markets, Russian crude is likely to remain at a discount to Middle Eastern crude. Both public and private refiners have maintained their import momentum from Russia, albeit at lower volumes compared to April 2024.

Public oil refineries such as Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) imported 1.04 million barrels of crude oil per day, down slightly from 1.05 million barrels per day in April 2024. However, on an annual basis, imports fell by 16 per cent.

Private oil refiners Reliance Industries Ltd (RIL) and Rosneft-backed Nayara Energy imported about 679,000 bpd of oil from Russia in May 2024, down from 695,000 bpd in April. Shipments were down 5% year-on-year.

Iraq sees rise in crude oil from US

Crude oil imports from Iraq increased 16% month-on-month and 27% year-on-year to about 936,000 barrels per day. Similarly, imports from the UAE increased 7% month-on-month to 340,000 barrels per day. In May 2023, India imported about 190,000 barrels per day from the UAE. FTA and Rupee Trade Agreement also contributed to the increase in imports.

Cargoes from Saudi Arabia, however, fell 10 percent month-on-month to about 606,000 barrels per day. Imports, however, were up 11 percent year-on-year. “Meanwhile, as Middle Eastern crude supplies remain tight, exporters such as Saudi Arabia are setting higher OSPs for medium-acid grades than last month, forcing refiners to turn to available Russian crude,” Huang said.

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Crude oil shipments from the United States increased 7% month-on-month to about 340,000 barrels per day. Imports in May 2023 were about 135,000 barrels per day. Industry sources said imports were of light sweet crude oil due to weak market fundamentals due to refinery shutdowns in Europe and lower US demand, high supply especially from US exports, and better price arbitrage compared to West Asian crude.

Overall, India’s crude oil imports declined marginally to 4.54 million bpd in May 2024 (April: 4.58 million bpd), but were up 1.6% year-on-year.

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