India gorges on discounted Russian crude, enjoys fuel export bonus: Russell
Repeats earlier item, no change to text (The opinions expressed here are those of the author, a columnist for Reuters
By Clyde Russell
LAUNCESTON, Australia, April 26 (Reuters) -As Middle East crude exporters cut output and raise prices, India's refiners are successfully switching to Russian oil and enjoying the double bonus of cheaper cargoes and higher margins for exported refined products.
India's crude imports from Russia are expected to reach a record high in April as Asia's second-biggest oil buyer increasingly turns away from its traditional suppliers in the Middle East.
Refinitiv Oil Research estimates that India will import 1.94 million barrels per day (bpd) from Russia in April, while commodity analysts Kpler are more bullish, forecasting arrivals of 2.39 million bpd.
India's total imports from the Middle East are estimated by Refinitiv at 1.92 million bpd in April, meaning that for the first time arrivals from Russia will exceed those from all Middle East producers combined.
Iraq remains India's top supplier from the Middle East, with April arrivals estimated at 840,000 bpd, with Saudi Arabia in second place at 640,000 bpd.
Before Russia's invasion of Ukraine in February last year, India was a minor importer of Russian crude, with Refinitiv data showing average arrivals of about 44,500 bpd in the 12 months from January 2021 to February 2022.
As Russian oil was increasingly sanctioned and shunned by European buyers and some in Asia, such as Japan, the steep discounts on offer led to India's refiners buying increasing volumes.
By July last year, India's imports from Russia were up to about 857,000 bpd, and they have steadily increased since then, before sharply accelerating this year.
It's likely no coincidence that India's refiners have been preferring Russian oil over Middle Eastern grades, which have been becoming more expensive relative to most other crudes as Saudi Arabia raises its official selling prices (OSPs).
Saudi Aramco, the kingdom's oil producer, raised its OSPs for Asian clients for a third-straight month for May-loading cargoes, taking the cost to a premium of $2.80 a barrel over the regional Oman/Dubai benchmark.
Aramco's pricing moves tend to be followed by other Middle East exporters, meaning that their crude now costs more on a relative basis than not only Russian cargoes, but also from producers such as the United States, which is outside the Organization of the Petroleum Exporting Countries, and its allies in the wider OPEC+ group.
INDIA DIVERSIFIES
While India's switch to Russian crude is certainly the headline news, it is worth noting that the South Asian nation has also been buying increasing volumes from the non-OPEC+ exporters.
Arrivals from the United States are estimated at 160,000 bpd in April, up from 60,000 bpd in March.
India has also secured cargoes from Malaysia and Brunei in recent months, having in the past only been a sporadic buyer from the Southeast Asian producers.
The Middle East's share of India's imports likely dropped to 39.8% in April, according to Refinitiv, down from the 12-month average of 56%.
The discount on Russian Urals grade crude has narrowed from levels around $30 a barrel in the middle of last year to closer to $10, but this still offers India's refiners a massive price incentive, especially if they use the cheap oil to produce fuels for export.
While the buying of Russian crude is fairly broad-based among India's refiners, the biggest buyer is Reliance Industries RELI.NS, which operates a 1.24 million bpd refinery complex in Jamnagar.
Kpler data shows that this complex is expected to receive 20.87 million barrels of Russian crude in April, or about 30% of the total volume of India's imports.
The Jamnagar refinery is India's major export-orientated plant, with Kpler data showing it is on track to ship 10.23 million barrels of diesel, about 83% of India's total exports, and 4.94 million of gasoline this month, which is about half of India's total.
The opinions expressed here are those of the author, a columnist for Reuters.
GRAPHIC-India's crude oil imports, total, Middle East and Russia:https://tmsnrt.rs/3HerCNe
Editing by Robert Birsel
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
