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Indian companies resumed buying oil from Russia after the discount increased, possible impact on China's supply
Oil Trade: Bharat Petroleum and Indian Oil have resumed buying Russian crude oil after the discount increased. Orders have been placed for September-October delivery. Earlier, purchases were stopped in July due to low discounts and US warnings. Now Urals is getting a discount of $3 per barrel. This may affect the supply of China, which was increasing purchases when India stopped.
Domestic government companies have resumed purchasing crude oil from Russia due to increased discounts. Bharat Petroleum and Indian Oil have restarted buying for September and October delivery. The discount on Russian oil had decreased significantly for some time, leading to a halt in purchases. The return of Russian oil imports by government refineries may reduce supplies to China, which is the top buyer. When domestic companies stopped buying, China increased its purchases. Domestic refineries ceased buying Russian oil in July after discounts dropped and due to criticism from the US. US President Donald Trump also threatened to impose an additional 25 percent duty on Indian goods from August 27 for buying Russian oil.
Officials said the discount on Urals crude has risen to three dollars per barrel, making it more attractive for refineries. Besides Urals, Indian Oil has purchased other Russian grades, including Varandey and Siberian Light.
The share of OPEC countries in India's total imports reached a five-month high in July. Russian oil imports decreased by 3.6 percent to 17.3 lakh barrels per day from January to July. For the first time since 2011, India did not import oil from Latin America in July.
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Russia remained India's top oil supplier, followed by Iraq and Saudi Arabia. Partly due to Reliance reducing purchases by about 19 percent in July compared to June, India's Russian oil imports also declined. State-run refineries began replacing Russian oil with alternative supplies from the Middle East and the US in August and September. Indian Oil stated it will continue to buy Russian oil depending on economic conditions. Chinese refineries purchased 15 cargoes of Russian oil for October and November delivery.
According to data, India's Russian oil imports fell in July as some refineries slowed purchases due to low discounts. Additionally, Indian fuel demand generally drops during the rainy season. However, Russian oil imports are expected to decline further in August as Indian state-run refineries halted buying Urals crude due to low discounts.
India imported 1.5 million barrels of Russian crude daily in July, a 24.5 percent decrease from June. Russia's contribution to India's total imports was 34 percent (44.4 lakh barrels per day) in July. During this period, India's oil imports were the lowest since September 2023.
