Two of the biggest refiners in India have stopped looking for spot Russian crude oil supply set to arrive after December 5, the day on which the EU embargo on Russian oil shipments enters into force, sources familiar with the Indian firms’ procurement plans told Bloomberg on Tuesday.
The two refiners are Indian Oil Corporation and Bharat Petroleum Corporation Limited (BPCL), according to the sources.
India, the world’s third-largest crude oil importer, has been importing large volumes of Russian oil after the Russian invasion of Ukraine due to the cheap supply with hefty discounts on the Russian grades compared to benchmarks.
Now IndianOil and BPCL, two of the biggest state-owned importers of Russian crude oil in India, are awaiting more clarity on the EU sanctions regime ahead of the December 5 deadline, including on the possibility of secondary sanctions on buyers of Russian crude.
The EU is set to impose as of early December an embargo on imports of Russian crude by sea and ban all maritime transportation services to all buyers unless the Russian oil is priced at or below a certain price cap, yet to be determined. Russia has repeatedly said that it would not export its oil to any country that will have joined the G7 and U.S.-led proposal for a price cap.
As early as September, Indian purchases of Russian oil were already expected to slow as the Asian importer was looking to more African and Middle Eastern supply as shipping rates on longer voyages jumped. With a recent surge in freight rates, Russian oil doesn’t look so cheap, and the discount of Russia’s oil to benchmarks has narrowed.
India will also further diversify its oil imports to better prepare for future OPEC+ production cuts that raise oil prices and tighten supply, its Petroleum Minister Hardeep Singh Puri said last week.
By Charles Kennedy for Oilprice.com
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