New Delhi: India’s Russian oil imports are poised to top 1 million barrels per day in December, trade and refining sources said, defying expectations for a sharp decline as refiners have resumed buying from non-sanctioned entities offering deep discounts.
Ties between the two countries have remained strong despite pressure from Western sanctions after Russian President Vladimir Putin met with Indian Prime Minister Narendra Modi earlier this month. At the time, the two leaders said their cooperation would continue.
After India – the world’s third-largest crude importer – shipped in 1.77 million bpd of Russian oil in November, up 3.4% from October, according to data from trade sources, imports were expected to plunge due to Washington’s sanctions on two top Russian producers as some refiners slowed or paused purchases.
December arrivals are likely to exceed 1.2 million bpd, according to preliminary LSEG trade flow data, which could rise to an average of 1.5 million bpd by the end of the month, one trade source said.
The source and others declined to be named publicly as they were not authorised to speak with the media.
India’s December imports from Russia have been fuelled by a rush among buyers to finalise deals ahead of Washington’s November 21 deadline for completing transactions with Rosneft ROSN.MM and Lukoil LKOH.MM, with several such cargoes recently arriving at Indian ports, LSEG data shows.
Imports could remain near December levels in January as new non-sanctioned entities step in to supply Russian cargoes, trade sources said.
Refining sources, however, estimated that January volumes would be lower than 1 million bpd as Reliance IndustriesRELI.NS has halted purchases. Reliance is receiving at least 10 Russian oil cargoes this month, according to LSEG data.
Reliance did not immediately respond to a request for comment.
STATE REFINERS RETURN TO PURCHASES
Top refiner Indian Oil Corp IOC.NS is buying Russian volumes in line with pre-sanctions levels, two sources said. Bharat Petroleum BPCL.NS has raised its January purchases to at least six cargoes from two in December, while Hindustan Petroleum is in talks for January loadings, sources said.
The three state refiners and India’s oil ministry did not respond to requests for comment.
Private refiner Nayara Energy, which is majority-owned by Russian firms including Rosneft, continues to buy only Russian oil following the withdrawal of other suppliers after it was sanctioned by the EU and Britain.
Reliance and HPCL Mittal Energy have said they are halting Russian oil purchases. They, along with Mangalore Refinery and Petrochemicals MRPL.NS, are skipping Russian purchases for January, sources said.
MRPL did not respond to a request for comment.
TOP RUSSIAN BUYER
India became Russia’s biggest seaborne crude buyer after the West imposed a raft of sanctions against Moscow for invading Ukraine. But those purchases became a liability in trade talks with the U.S., as President Donald Trump doubled import tariffs on Indian goods to 50%.
“Thanks to President Trump’s leadership, Russia has been forced to accept deep discounts and fewer buyers for its oil,” a U.S. official said. “These pressures are limiting the Kremlin’s revenues and increasing the financial strain of sustaining its war.”
To facilitate exports, Russian producers are using domestic market swaps – exchanging oil bound for local refineries with export volumes handled by non-sanctioned firms – to maintain flows to India without breaching sanctions, industry sources said.
Such swaps are commonly used in Russia to manage domestic supply tightness while preserving export commitments, they added.
“There is a possibility that non-sanctioned entities can increase their crude output and shift supplies to export markets and sanctioned barrels can meet Russia’s local demand,” said Prashant Vashisth, vice president at Moody’s affiliate ICRA.
Indian refiners are attracted by January prices that are discounted by about $6 per barrel to dated Brent, two or three times wider than in August, sources said.
Indian refiners’ Russian oil purchases peaked near 2 million bpd in June, according to data obtained from trade sources