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Cheaper Russian crude compared to Middle Eastern alternatives has prompted Indian refiners to import more crude from Russia in September compared to a seven-month low in August, according to preliminary tanker-tracking data.
India’s crude oil imports from Russia rebounded amid tighter market and more expensive crude from the Middle East, including from Saudi Arabia, which has been raising its contractual selling prices for Asia.
India, the world’s third-largest oil importer, welcomed around 1.55 million barrels per day (bpd) of Russian oil in September, up by 16% compared to August, per LSEG data cited by Reuters.
In August, India’s crude oil imports from Russia fell to a seven-month low, according to Kpler and Refinitiv data, due to routine refinery maintenance as well as decreased discounts on Russian grades. India's crude oil imports from Russia fell by about 20% in August from July levels to 1.5 million bpd—and down from 2.2 million bpd in June.
While Indian imports of Russian crude rebounded in September, imports from Saudi Arabia are estimated to have dropped by 10% month over month to around 676,000 bpd in September.
In early September, Saudi Arabia extended its 1 million bpd cut through December “with the aim of supporting the stability and balance of oil markets.” A day later, the Kingdom announced yet another increase in its official selling prices (OSPs) for its crude going to Asia in October, following a price hike for September, too.
Russian grades are cheaper on the spot market than Middle Eastern crude in term contracts. In light of the recent hikes in Saudi prices, Indian refiners are more inclined to buy Iraq’s Basrah Medium, which is some $2 a barrel cheaper than Saudi Arabia’s Arab Light and Arab Medium, Viktor Katona, lead crude analyst at Kpler, told Reuters.
In recent days, tightening global crude supply and rising international prices have raised the price at which Russia’s crude is being sold to India at about $20 per barrel over the G7 price cap of $60. The Russian flagship crude grade, Urals, is being sold to one of Moscow’s top two customers, India, at nearly $80 per barrel now, traders have told Reuters. Still, this is cheaper by over $10 per barrel compared to the grades from the Middle East.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com