It has become too expensive: India reduces oil purchases from Russia

Indian refineries are cutting purchases of Russian oil with delivery in November. The main reason is that Urals has risen sharply in price and has almost lost its price advantage over oil from the Middle East.

This is reported by Bloomberg.

According to the agency, Russian Urals loaded in Baltic ports is now selling at a premium of more than $10 per barrel to Brent . Previously, it was the significant discount that made it attractive to Indian buyers.

Due to the increase in the price of Russian oil, Indian refineries have begun to purchase raw materials more actively from the Persian Gulf countries. An additional advantage for them has been shorter delivery routes, which allows them to reduce costs against the background of the high cost of tanker transportation.

Another factor is the growing demand for Russian oil from China. According to Kpler senior manager Sumit Ritolia, Chinese buyers have been competing more actively in recent months for shipments that could previously have been sent to India.

According to Kpler estimates, Russia’s share of India’s oil imports fell to about 35% in September, down from 56% in July.

Average Russian oil supplies to India fell to around 310,000 barrels per day in the four weeks to October 4. This is the lowest level since March 2022.

Against this backdrop, supplies from the Middle East are recovering. According to Shell CEO Wael Sawan, oil flows through the Strait of Hormuz have already recovered to about 80% of pre-war levels .

A separate risk for Indian companies remains possible US sanctions and tariff measures. At the same time, Bloomberg notes that the current reduction in purchases is primarily explained by the economics of deals – Russian oil no longer offers the price advantage that previously made it so attractive to India.

Recall that in September, India already planned to reduce purchases of Russian oil due to the risk of new US measures . At that time, Russian raw materials still remained cheaper than some alternatives.

Previously, Indian refineries also reduced purchases due to problems with Russian supplies , which were affected by attacks on Russian oil refining and port infrastructure.

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