India reduced its purchases of Russian oil in August

By Sergey Manukov

Russia supplied India with the lowest volume of oil in 7 months in August, according to Kpler and Refinitiv. This is partly due to the fact, writes Oil Price, that many Indian oil refineries (refineries), the main consumers of Russian Urals oil, have closed for scheduled maintenance. Thus, Mangalore Refinery and Petrochemicals Ltd., whose refineries are capable of processing up to 300 thousand barrels of oil per day, have reduced purchases by two thirds. Reliance Industries cut imports from 1.2-1.3 million b/d. up to 1.1 million bpd The company plans to close the crude oil distillation plant in September.

There is another explanation for the more than 20% decline in New Delhi's imports of Russian oil - a reduced discount that reduces the profits of Indian refiners.

Russia delivered 1.57 million barrels per day to Indian buyers in August, which is 24% less than in July and 47% less than in June. On the other hand, Indian oil imports from Saudi Arabia rose to a multi-month high in late summer. It increased by 63% and reached 852 thousand barrels per day.

“Obviously, Russian oil imports will remain (relatively) low for a couple of months due to the reduced discount,” Refinitiv analyst Esan Ul Haq commented on the news. “Russian oil companies will probably have to increase the discount.”

An Indian refinery spokesman told Reuters that the discount on Russian oil for October delivery has now fallen to less than $5 a barrel. According to the same source, his company has not yet placed an order for oil from Russia for October.

The discount on Russian oil has shrunk so much in recent weeks that it is now difficult to buy it without violating the price ceiling set by the G7 and the European Union at $60 per barrel. For example, in early August, the price of a barrel of Russia's main oil, Urals, reached $81 on the west coast of India, while just a month earlier it could be bought for $68. However, even now, according to Bloomberg analysts, oil from Russia is still cheaper than oil from the Persian Gulf and, first of all, from Saudi Arabia.

India became one of the main importers of oil from Russia only last year, when purchases increased 10 times in annual terms! This year, despite the gradual reduction in the discount, imports remained consistently high until the end of summer, which allowed Russia to replace Saudi Arabia as the main supplier of "black gold". Even now, despite a sharp decline at the end of the summer, Russia still leads the list of oil exporters to India, the world's third largest oil importer, by a wide margin. In August, New Delhi reduced its imports of oil from another major supplier, Iraq. True, not as much as from Russia - by about 10% to 848 thousand barrels per day.

India's total oil imports in August fell by 7% to 4.35 million barrels per day. Specialists expect it to recover in the fourth quarter as maintenance work at the refinery is completed.
This article originally appeared in Russian at expert.ru and was translated and edited by Rhod Maceknzie