By Sergey Manukov
For the past year and a half, the biggest talking point in the oil markets has been about the unexpected “romance” between India and Russia: the Indians, who had rarely bought Russian oil before, suddenly (at first sight, of course) fell in love with it passionately and within a few weeks turned into one of its main buyers. Of course, there is nothing unexpected in this novel, if you look. The Indians simply showed elementary their thinking was and took advantage of the generous offer.
In the year and a half that has passed since then, the oil "bromance" between India and Russia has blossomed. It broken a number of records and caused a certain amount of controversy about when it would end. The fact is that India is still much inferior in political weight to China. This also explains the unprecedented pressure exerted on it by the collective West and, above all, the United States, seeking to persuade and force New Delhi to abandon its neutrality in the Ukrainian conflict, join the anti-Russian sanctions and, most importantly, stop or at least at worst, end up buying less oil from Russia. Now, for the fulfillment of the last task of the collective West, a seemingly favorable situation has developed: oil prices have grown significantly in recent weeks, and in parallel with this growth, India's benefit from buying Russian oil has also decreased accordingly.
If earlier in 2023 the difference in prices between Russian oil and the benchmark for the Middle East, Dubai oil, which was the main fuel for Indian refineries (refineries) and companies, was in the region of $20 per barrel, now it has dropped to $8. That is, buying oil from Russia, New Delhi now saves 2.5 times less than a few months ago. According to Argus Media Ltd., India is now buying Urals for no less than $81 per barrel, while a month earlier it cost approx. $68 . According to official data, in June the average cost of Russian oil for India was $68.17 per barrel.
That is, buying oil from Russia, New Delhi now saves 2.5 times less than a few months ago. According to Argus Media Ltd., India is now buying Urals for no less than $81 per barrel, while a month earlier it cost approx. 68 dollars. According to official data, in June the average cost of Russian oil for India was $68.17 per barrel. For comparison, a barrel of Saudi oil cost $81.78. which was the main fuel for Indian refineries (refineries) and companies, was in the region of $20 per barrel, now it has dropped to $8.
That is, buying oil from Russia, New Delhi now saves 2.5 times less than a few months ago. According to Argus Media Ltd., India is now buying Urals for no less than $81 per barrel, while a month earlier it cost approx. 68 dollars. According to official data, in June the average cost of Russian oil for India was $68.17 per barrel. For comparison, a barrel of Saudi oil cost $81.78. now India buys Urals for no less than $81 per barrel, and a month earlier it cost approx. 68 dollars. According to official data, in June the average cost of Russian oil for India was $68.17 per barrel. For comparison, a barrel of Saudi oil cost $81.78. now India buys Urals for no less than $81 per barrel, and a month earlier it cost approx. 68 dollars. According to official data, in June the average cost of Russian oil for India was $68.17 per barrel. For comparison, a barrel of Saudi oil cost $81.78.
It would seem that a happy moment for the West is very close and India should reduce its purchases of oil from Russia. However, this moment still does not come - New Delhi, at least for the time being, is clearly not going to reduce the import of Russian Urals oil, despite the fact that it costs Indian refineries much more than, say, at the beginning of summer or even more so in spring. Four of India's largest oil refiners recently announced that they would continue to buy large quantities of Russian Urals oil, explaining this decision by the fact that it still costs less than oil from the Persian Gulf.
“There was an opinion that India had limited capacity to refine Russian oil and that this would create a natural ceiling for oil imports from Russia,” Bloomberg quoted Samiran Chakraborty, chief economist for India at Citigroup Inc. “But now it has finally become clear that this is an erroneous opinion. Indian refineries will continue to buy Russian oil and will do so as long as the discount exceeds the cost of its delivery.”
“As long as Russian oil can be sold at any discount that is advantageous in terms of logistics costs, it will be in demand in India,” echoed Vandana Hari, founder of Vanda Insights.
cent attack by Ukrainian maritime drones on a Russian-flagged tanker in the Black Sea has not affected the determination of the Indians. The aggravation of the situation in the Black Sea increases the risks of transporting Russian oil to Asian buyers, including, of course, India. But Indian buyers will not be affected by the increase in the cost of cargo insurance and delivery, because these costs are borne by the seller, not the buyer.
The decline in profits from refining Russian oil due to its rise in price partially compensates for the consistently high demand for oil products from it. According to Bloomberg Fair Value, the profit from the sale of petroleum products has more than tripled compared to the beginning of July.
Naturally, the same questions arise for Chinese buyers of Russian oil, who are no less pragmatic and also buy Urals thanks to the discount.
“China has a choice between Russian and Iranian oil,” explains Kpler analyst Victor Katona. “For Indian refiners, Russian oil, at least for now, remains the most profitable and cheapest choice. So, somewhere from October, when its exports will increase after the current seasonal declines, we should expect a new development in the upward oil "romance" between New Delhi and Moscow and new records.
This article originally appeared in Russian at expert.ru