January 5, 2024
New Delhi, India
India-Russian Crude Trade
In the face of ongoing threats in the Red Sea, India’s appetite for Russian crude oil remains unwavering, according to a recent report by S&P Global Commodity Insights.
India’s Crude Import Landscape:
Russia Holds Strong Position India’s reliance on Russian crude continues, constituting over 35% of the country’s total crude imports. Despite a recent slowdown in the first half of 2023, Russia maintains its stronghold as India’s top supplier.
Red Sea Threats and Shipping Routes:
No Diversions Seen Despite Challenges Despite multiple attacks on shipping in the Red Sea, no diversions in Russian crude shipments to India have been recorded. The Red Sea route remains the preferred option, with Russia strategically holding a substantial volume of oil at sea, acting as a buffer against potential disruptions.
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Refinery Maintenance Impact:
Temporary Slowdown Explained The recent slowdown in Indian refinery appetite for Russian crude is attributed to factors such as increased Middle Eastern flows, weather-related port issues in Russia, heightened refinery maintenance, and increased scrutiny on ships carrying Russian oil. However, this is expecting to be temporary.
Future Scenarios and Projections:
Anticipated Resurgence in Imports Projections indicate a bounce-back in crude imports as maintenance activities decrease. Even in the event of an escalation in Red Sea attacks, India’s crude imports from Russia are expected to constitute a significant portion (35%-45%) of the overall imports, provided competitive pricing is maintained.
Alternative Shipping Routes:
Cape of Good Hope as an Option While the Red Sea route remains resilient, there is a possibility that US and Latin American crude suppliers may opt for the Cape of Good Hope shipping route, providing an alternative route.
Closure:
In conclusion, India’s demand for Russian crude showcases resilience, navigating challenges in the Red Sea and maintaining a strong relationship with Russia in the oil trade. The strategic positioning of Russian crude at sea and expectations of a rebound post-maintenance contribute to the robustness of this enduring partnership.
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