As global oil dynamics continue to shift, India’s crude oil imports witnessed significant changes in September, with Russia’s share skyrocketing while Saudi Arabia saw a decline. Analysts speculate on the implications of this evolving trend.
In the realm of global oil trade, India’s crude oil import landscape experienced a notable transformation in September, marked by a remarkable surge in imports from Russia and a dip in imports from Saudi Arabia. This shift reflects the complex interplay of pricing dynamics and geopolitical factors in the energy sector.
Data from energy cargo tracker Vortexa reveals a staggering 80% increase in India’s imports of crude oil from Russia during September. The share of Urals crude in India’s oil imports rose to 1.56 million barrels per day (bpd) compared to 865,000 bpd during the same period the previous year. On a monthly basis, imports increased by 8%, reaching 1.44 million bpd. Commodity research and analysis company Kpler’s data mirrored this trend, reporting that crude imports from Russia surged to 1.8 million bpd in September, a substantial rise from 977,000 bpd in September 2022.
Key drivers behind this surge in Russian crude imports include favorable pricing dynamics. Urals crude has been trading at a discount of -$4 per barrel to Brent on a delivered basis, making it an economically attractive choice for Indian refiners. This pricing advantage, coupled with robust demand for Russian crude from China, is expected to sustain the differentials on Russian barrels for the foreseeable future.
Conversely, Saudi Arabia, which has historically been a major crude oil exporter to India, witnessed a decline in its share of imports. In September, India imported approximately 506,000 bpd of crude oil from Saudi Arabia, a significant drop from the 855,000 bpd in August. This represents a nearly 45% decrease from the 918,000 bpd recorded in September 2022.
The reduced share of Saudi Arabian imports can be attributed to increased costs associated with Saudi Arabian crude after the country announced an extension of its production cuts until December. Iraq, on the other hand, has been pricing its crude at a more attractive rate, making it a preferable choice for Indian refiners. In September, India imported 926,000 bpd of crude from Iraq, marking a 14.6% year-on-year increase and an 8.54% rise from August. Kpler’s analysis also pointed to heightened imports from Iraq, reaching 916,000 bpd the previous month compared to 805,000 bpd in the same period the previous year.
Currently, Russia stands as the largest supplier of crude oil to India, followed by Iraq and Saudi Arabia. However, the reduced share of Saudi Arabian imports signifies a shift in the market landscape.
Analysts anticipate that India will maintain its current levels of crude oil imports during the upcoming winter season, primarily due to Russia’s ban on diesel and gasoline exports. This ban has altered the dynamics of the global oil trade, compelling Indian refiners to secure alternative sources of crude oil.
While the import landscape undergoes transformation, questions linger about whether Saudi Arabia and Russia will extend their output cuts beyond December, potentially exerting further pressure on crude oil prices. Brent crude, for instance, recently reached $97 a barrel, marking its highest level since November 2022. Analysts warn that if supply disruptions persist, crude prices could experience further upward pressure in the first half of 2024.
In this evolving landscape, India remains vigilant in fulfilling its growing crude oil requirements while navigating shifting dynamics in global markets. The relative bargaining power of crude sources, pricing flexibility, and geopolitical factors continue to shape India’s strategic oil imports.
As the world observes how the oil market evolves and potential supply issues persist, the dynamics of India’s crude oil imports remain closely tied to the broader global energy landscape.