Since getting the green signal from the US, Indian refiners have bought about 30 million barrels of Russian oil to help the country deal with the supply shortage in the Middle East. This information has been received from people having knowledge of the deal. India had been reducing its purchases of Russian oil under US pressure since last year, making up the shortfall by buying replacement barrels from Saudi Arabia and Iraq — but the supply was cut off due to the escalating conflict in the Middle East. The Strait of Hormuz, which connects the region’s major producers to the rest of the world, has been virtually closed since the US and Israeli attacks on Iran began.
Reliance and Indian Oil bought oil
Since getting a waiver from the US late last week, refiners in the South Asian country, including Indian Oil Corp and Reliance Industries Ltd, have bought all unsold cargoes of Russian crude in the spot market, the people quoted in the Bloomberg report said. The oil was loaded but not committed, and most of it was already in Asian waters. Russian crude — which includes several grades such as Urals, ESPO and Varande — is being offered at a premium of $2 to $8 a barrel over London’s Dated Brent benchmark, the people said.
Before the war in the Middle East, Russian oil traded at a discount to this benchmark. Both Mello (white) and Sara (blue) changed course just days after the US announced a waiver allowing India to buy Russian crude. Traders said state-owned Indian Oil bought about 10 million barrels of Russian crude, while Reliance also bought at least the same amount. No statement has come from Indian Oil and Reliance.
Russian oil turned towards India
The US exemption included transactions involving Russian crude oil and petroleum products loaded on ships before March 5, provided it was delivered to India and purchased by an Indian firm. Since then, tankers that were moving away from the subcontinent have returned. Among them, Melo and Sara have changed their route towards India in the last few days, whereas they had initially mentioned Singapore as their destination.
India, which does not normally buy much oil from Russia, increased purchases after the attack on Ukraine in early 2022. After that, to put pressure on Russia and end the war with Ukraine, Trump also announced Russian oil tariffs along with a ban on Russian oil companies. According to data intelligence firm Kpler, purchases reached a peak of more than 2 million barrels per day in mid-2024, but fell to an average of 1.06 million barrels per day in February.