Russian shipments averaged 1.67 million barrels per day in January compared to 1.48 million bpd in December and 1.53 million bpd a year earlier.
The toughest US sanctions on Russian crude oil supplies proved inadequate to stanch India's appetite for the discounted grades in January.
India increased imports of Russian crude oil by 13 per cent in January from December and by 9 per cent from a year earlier after Indian refiners took advantage of the 49-day grace period to source Russian oil, according to ship tracking data and industry officials.
State-run refiner Indian Oil increased imports by over 50 per cent on the month.
However, February shipments are unclear and refiners expect a huge deficit of cheap Russian oil from March onwards, top refining sources said.
Russian shipments averaged 1.67 million barrels per day in January compared to 1.48 million bpd in December and 1.53 million bpd a year earlier, according to market intelligence agency Kpler.
Reliance industries accounted for 400,000 bpd, followed by Indian Oil at 354,000 bpd, with both accounting for a combined 46 per cent of purchases during the period.
A level of certainty is not visible in India's February supplies of Russian grades.
Kpler, based on algorithms, is predicting 1.6 million bpd in shipments, but unlike January, Reliance is the only committed buyer next month, accounting for 385,000 bpd.
State-run refiners put together account for hardly 100,000 bpd. The rest is accounted for by a category of 'others', which comprises sanctioned producers like Surgutneftegas.
Market intelligence provider Vortexa pegged January shipments at 1.52 million bpd and February deliveries at 1.8 million bpd.
Indian Oil's share of Russian oil in its overall imports declined to 25 per cent this financial year until December from 30 per cent last financial year.
'For the month of March, yes, whatever I thought, it is not going to come in the same quantity. But what will happen in April, May, June onwards, we feel that because as such, Russian crude is not sanctioned, it is going to come,' IOC CFO Anuj Jain told analysts in the Q3 earnings call.
'But definitely we will only buy if it comes at a reasonable discount,' Jain added..
Sanctions have shrunk discounts while boosting freight rates.
Russian traders are now offering only $1.5 to $2 per barrel discounts on delivered Russian oil compared to $3 to $3.5/bbl in December, refining sources said
'And the discounts we were getting up to December were in the range of benchmark crude minus $3/bbl. But now the discounts have come down in the range of benchmark crude minus $1 to 1.5 per bbl,' Jain told analysts.
Rates for Aframax tankers carrying Russian barrels from the Baltic Sea to western India rose 47 per cent to $10.10/bbl, while rates to east India climbed by 48 per cent to $11/bbl, UK market information provider Energy Intelligence reported.
In the Black Sea, freight rates at Novorossiysk port for Aframax shipments to India increased by 60 per cent to $8.50/bbl for shipments to west India.
Moreover, premiums on alternate crudes like UAE's Murban have climbed three fold to a $4/bbl premium over benchmark Dubai after the latest instalment of US sanctions as China and India bid higher for scarce cargoes.
Indian officials told Business Standard that while India does not officially accept US sanctions -- but only sanctions endorsed by the United Nations -- Indian refiners and banks are forced to accept US strictures because of their exposure to the US dollars and western financial markets.
That means Indian refiners will accept sanctioned tankers or producers, which have loaded crude oil prior to January 10 and discharging by February 27, according to the US Office of Foreign Assets Control and Indian refining officials.
So, Russian cargoes delivered by producers like Surgutneftegas will not be entertained by Indian ports in February.
Washington announced on January 10 measures to sanction 183 vessels, or nearly every third tanker carrying Russian oil, two Russian insurers, which offer coverage to most of India's Russian oil purchases, and two leading Russian oil and gas producers and a bunch of traders, which contribute to a third of Russian flows to India.
US oil shipments surged four fold to 296,000 bpd for a 6 per cent share of total crude imports in January from December.
US officials in the Biden administration had met Indian officials in recent months, urging New Delhi to increase imports of US oil, industry officials said.
Iraq, Saudi Arabia, UAE and Kuwait supplied a combined 50 per cent of India's crude in December compared to 47 per cent in January.
Iraq and Saudi Arabia were the second and third biggest suppliers of oil to India at 21 per cent and over 14 per cent shares respectively in January.
Feature Presentation: Ashish Narsale/Rediff.com
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