Indian State Refiners Eye Middle East Crude Oil To Offset Russian Supply Shortfall. India’s Imports Of Russian Oil Lowest In Nov Since June 2022.

Indian state refiners are exploring Middle Eastern crude oil as a replacement for reduced Russian spot supply, according to three refining sources. This shift, driven by an 8-10 million barrel shortfall in Russian oil for January loading, involves major refiners Indian Oil Corp (IOC), Bharat Petroleum Corp (BPCL), and Hindustan Petroleum (HPCL).

The reduced availability of Russian crude stems from increased domestic demand in Russia and commitments under its OPEC pact, sources revealed. Refiners anticipate continued difficulties in securing Russian oil in the coming months. However, they plan to rely on existing inventories to meet crude processing needs through March.

To address the shortfall, two sources mentioned plans to lift additional volumes from Middle Eastern suppliers through optional term contracts or by issuing spot tenders for high-sulfur crude. Notably, IOC had previously floated spot tenders for sour crude grades in March 2022.

India emerged as the largest importer of Russian crude after the European Union imposed sanctions on Moscow’s oil imports following its 2022 invasion of Ukraine. Russian oil now accounts for over a third of India’s energy imports, thanks to discounted pricing of $3-$4 per barrel compared to rival grades.

Russian spot crude exports have faced challenges since November, as refinery operations resumed post-maintenance and adverse weather disrupted shipments. Additionally, most of Rosneft’s supplies are tied up in a private deal with Indian refiner Reliance Industries, which accounts for about half of Rosneft’s seaborne exports, leaving limited volumes for spot sales.

Although traders have offered Russian crude for payment in Chinese Yuan, Indian state refiners ceased such transactions following government advisories last year.

Still, India’s imports of Russian oil dropped in November to their lowest since June 2022, per a European think tank report, yet Russia remains India’s top supplier, followed by Iraq and Saudi Arabia. Russia primarily exports ESPO and Sokol crude grades to India.

Globally, China is the largest buyer of Russian crude (47%), followed by India (37%), while the EU and Turkey each account for 6% of Russian oil exports. Despite the challenges, Russian crude continues to be a cornerstone of India’s energy mix due to its competitive pricing.

Russia Stays Firm on OPEC+ Commitments, Volatile Crude Oil Markets

Russia has reaffirmed its commitment to the OPEC+ alliance, maintaining its oil output at the agreed level of 9 million barrels per day (bpd). Under the current deal, Russia’s output quota from June through the end of the year stands at 8.98 million bpd, reflecting the nation’s adherence to the group’s production strategy.

OPEC+ has been curbing oil production to stabilize global markets amid ongoing volatility. These measures are particularly significant for Russia, as oil sales remain a critical pillar of its economy.

In response to weaker demand—driven notably by China’s sluggish economic recovery—and rising supply from non-OPEC+ countries, the group decided to delay a planned increase in oil output originally scheduled for December by one month. This delay is intended to prevent further downward pressure on prices.

Compliance with production quotas remains a key focus for OPEC+, with Iraq and Kazakhstan drawing scrutiny for exceeding their targets. Both countries have pledged additional cuts to offset their overproduction and align with the group’s strategy.

The next OPEC+ meeting, set for early December, will outline production policies for January and beyond, with the group expected to continue its delicate balancing act to support the oil market amidst fluctuating global conditions.