Record oil is coming from Russia
A senior Petroleum Ministry official said on Monday that India has continued to buy Russian oil before, during and even after the relaxation of US sanctions. Refiners and traders have also indicated that oil remains in supply despite the US waiver period recently ending. Sujata Sharma, Joint Secretary, Petroleum Ministry, said that India’s purchase of crude oil from Russia has not been dependent on the US waiver framework, but is entirely driven by commercial interests. Sharma said during a media briefing that regarding the US waiver on Russia, I would like to emphasize that we are already buying oil from Russia… I mean, even before the waiver, during the waiver, and even now.
Russian oil will continue
He said that basically, the purchase decision is completely based on commercial understanding… There is no shortage of crude oil. Adequate supply of crude oil has been ensured… and it will not be affected whether there is exemption or not. The comments came after the US allowed waivers on purchases of some Russian crude to expire over the weekend. Under this exemption, deals were allowed related to Russian oil tankers which were already loaded with oil. The US first gave this relaxation in March, and later extended it till May 16, so that the pressure on global oil prices could be reduced through additional supply. Although Russian crude oil is not completely under sanctions, after the Russia-Ukraine war, Washington had urged India to reduce oil purchases from Moscow at concessional rates.
demand had reduced
According to a Bloomberg report, due to low domestic demand in India and ready supply of crude oil available from the US, UAE, Oman and Iraq, Indian refiners will be able to deal with any supply disruptions. Traders told Bloomberg that China’s limited participation in the spot market has also helped maintain supplies, while plant closures at Reliance Industries Ltd and Nayara Energy Ltd for maintenance have reduced purchases by private refiners. Russian crude oil, available at concessional rates, has become a major source of supply for India from 2022 onwards, after the equations of global oil trade changed due to sanctions imposed by Western countries after the Ukraine War. Last year, under pressure from Washington, Indian refiners had reduced the purchase of oil for some time, but later there was a tremendous increase in imports.
How much Russian oil was bought in May?
According to Kpler data cited by Bloomberg, India’s Russian oil imports are expected to be about 1.9 million barrels per day in May, which is very close to the all-time high. Bloomberg also reported that the amount of Russian crude oil kept in floating storage worldwide has increased to more than 7 million barrels, which is five times more than a month ago. One reason for this is that due to refinery maintenance work in India, the demand for processing has slowed down. Sumit Ritolia, modeling and refining manager at Kpler Ltd., told Bloomberg that options available at the same scale and price are very limited, especially in a market that still faces geopolitical uncertainty and fluctuations in oil supplies from the Middle East. It is unlikely that India will distance itself from Russian crude oil in the near future.
India has enough reserves
According to Bloomberg report, Indian refineries also hope that Washington can increase this exemption once again. US Treasury Secretary Scott Besant said in April that this exemption would not be extended further, but the administration later extended it for a short period. Oil Minister Hardeep Singh Puri has said that India has crude oil and LNG reserves for about 60 days, while LPG reserves are enough for about 45 days. Hindustan Petroleum Corp. Chairman Vikas Kaushal told analysts last week that we have not faced any problem in getting the crude oil of our choice. He said that of course, I would wish that I get this oil 30 dollars cheaper than the current price, but this is a different aspect.
