Indian Refiners Take Advantage of US Waiver to Increase Russian Oil Imports

Indian Refiners Resume Russian Oil Purchases Amid Middle East Supply Crunch

Key Developments:

• Over 10 million barrels of Russian crude have been bought by Indian refiners, with 15 million barrels already on tankers in the Arabian Sea and Bay of Bengal, and 7 million barrels idling near Singapore.
• State-run refiners Mangalore Refinery and Petrochemicals Ltd. and Hindustan Petroleum Corp Ltd. have resumed purchasing Russian oil, which had been sharply cut back under US pressure.

Market Impact:

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• The US has granted a one-month waiver on trade restrictions, allowing Indian refiners to quickly ramp up Russian oil purchases.
• Indian refiners are now paying a $2-to-$4 a barrel premium to Dated Brent for Russia's flagship Urals grade, a significant turnaround from last month's discounts of $15 to $20 a barrel below Brent.
• Resumption of Indian buying could see the country's imports from Russia rise back toward the peak of over 2 million barrels a day in mid-2024, up from last month's average of 1.06 million barrels a day.

Supply Chain:

• At least 18 vessels carrying Urals are now indicating they are heading to India, according to Kpler.
• Tankers laden with Russian oil had begun changing their destinations to signal Indian ports even before the US waiver was issued.

Outlook:

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• Refiners could quickly ramp up purchases again, potentially pushing volumes back above 2 million barrels a day in the near term, according to Sumit Ritolia, an analyst at data intelligence firm.