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India is reducing its imports of crude oil from Russia, but mostly not because of the U.S. tariff threat for buying Russian oil. Economics have always been driving Indian refiners’ purchases, and the past few weeks haven’t been different.
Russia is scaling back imports of Russian oil as the price of Russia’s flagship Urals grade loaded in the Baltic ports has jumped and now nearly equals the prices of Middle Eastern crudes, whose availability has increased in recent weeks as flows through the Strait of Hormuz have rebounded, sources with knowledge of the situation told Bloomberg on Thursday.
Urals is being offered at premiums of more than $10 per barrel over Dated Brent, while competition from China for Russian supply is also intensifying.
Urals is now nearly the same price as some grades from the Middle East, and Indian refiners have opted for Gulf region supplies, which have been rising in recent weeks, according to Bloomberg’s sources.
In the four weeks to October 4, crude oil shipments from Russia to India averaged just 310,000 barrels per day (bpd), per tanker-tracking data compiled by Bloomberg. That’s the lowest estimated four-week level since March 2022, when India started boosting imports of cheap Russian crude oil that was shunned, and later sanctioned, by the West after the Russian invasion of Ukraine.
But Russian crude oil is neither cheap nor without competition or tariff risks for India now.
While India reportedly has not told its refiners to reduce imports from Russia, they have been more cautious in the weeks since U.S. President Donald Trump signed a law that allows the President to potentially impose trade tariffs of up to 100% on countries that are large importers of Russian oil and natural gas.
Analysts say India is unlikely to replace all the Russian crude oil it is importing despite the threat of 100% tariffs on its products in the United States. But the economics of Urals vs. Middle East prices and higher Middle East crude availability are currently helping India reduce Russian oil imports.
By Tsvetana Paraskova for Oilprice.com
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