New US sanctions threaten to reduce Russia’s oil sales to India – the largest buyer of Russian crude oil by sea. This also hinders the two countries’ oil trade and forces processors to consider other sources of supply.
Not only that, the new sanctions may also increase transportation costs and impact on refining margins. Russia is still the main supplier to India, but refineries are having to import more products from elsewhere.
According to data analysis company Kpler, the total amount of oil imports from Saudi Arabia to India in February was 22% higher than in January. Reliance Industries, India’s largest private refinery, reached its highest volume since May 2020.
Bloomberg‘s tanker tracking data also shows that stricter enforcement of Western sanctions and payment problems have hampered India’s purchases of Russian crude . Some oil tankers previously planning to head to India had to turn back.
However, executives of Indian oil refineries said they still want to import more oil from Russia but will need US approval to increase sales again.
Russian oil is currently only 2-4 USD/barrel cheaper than other sources. This discount level once reached more than 30 USD/barrel after the Russia-Ukraine conflict.
Therefore, India’s imports of Russian oil have increased sharply because many refineries take advantage of oil sources. cheap price when other markets do not buy Russian oil.
In 2023 Russian crude oil accounts for nearly half of India’s purchases. However, recent US sanctions have caused some goods to be stranded.
In addition, oil refining profits have also decreased because refineries in India have to bear the burden of higher cost. They face stiffer competition from Russian supplies in Asia.
Increased shipping costs and tougher US sanctions enforcement have limited their ability to India’s access to cheap crude oil from Russia.
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