Mar 17, 2022

Russia jumps to fourth position as oil supplier to India, tanker data shows

• Share of oil from the U.S. and Africa declined
• India's oil imports up 6.9% in April from March
• Russian oil imports set to surge to 487,500 bpd - Refinitiv flows

NEW DELHI, May 17 (Reuters) - Russia became the fourth-largest oil supplier to India in April, with volumes set to rise further in coming months as low prices spur demand from the world's No. 3 oil consumer and importer, tanker tracking data showed.

Russia's share in India's oil purchases rose to a record 6%, about 277,000 barrels per day (bpd) in April, up from about 66,000 bpd in March, when it was in 10th position, according to the data, which was supplied by trade sources.

Indian Oil Corp. (IOC.NS), the country's top refiner, bought its first-ever Russian Arco oil cargo last month.

Western sanctions against Russia for its invasion of Ukraine has opened a rare arbitrage flow, prompting Indian refiners to increase buying of cheaper Russian oil shunned by many Western countries and companies. read more

"Prices of Russian Urals crude fell sharply due to sanctions against Russia while Kazakhstan's CPC blend crude came under pressure as it is loaded from a Russian port," said Ehsan Ul Haq, analyst with Refinitiv.

Indians had bought stranded Russian oil while some European buyers had bought higher volumes of African and U.S. oil, he said.

The share of African oil in India's overall oil imports declined to about 6% in April from 14.5% in March, while that of U.S. almost halved to 3%.

Grades from Azerbaijan, Russia and Kazakhstan together accounted for about 11% of India's imported oil in April, compared with about 3% in March. The share of Middle Eastern oil rose to 71% from 68%.

India's oil imports from Russia are set to rise further to about 487,500 bpd in May, since refiners have ramped up purchases from Russia, preliminary data from Refinitiv flows show.

Last month, Iraq continued to the top oil supplier to India, followed by Saudi Arabia and the United Arab Emirates.

In April, Indian refiners shipped in 4.7 million bpd of oil, up 6.9% from the previous month and about 11.6% higher than a year earlier, when a second COVID-19 wave hit local oil demand.

India's oil imports in April were high as refiners raised runs to meet local demand and gain from robust refining margins, Haq said.

"Also the companies got Russian grades at very tempting rates and they had to lift committed volumes under term contract with Middle Eastern producers," Haq said.

The higher imports from Russia dragged down OPEC's share of foreign supplies to India in April.

Russia's energy revenue higher now than just before Ukraine

By Timothy Gardner

WASHINGTON, June 9 (Reuters) - Russia may be getting more revenue from its fossil fuels now than shortly before its invasion of Ukraine, as global price increases offset the impact of Western efforts to restrict its sales, U.S. energy security envoy Amos Hochstein told lawmakers during a hearing on Thursday.

"I can't deny that," Hochstein told the Senate Subcommittee on Europe and Regional Security Cooperation in response to a question about whether Moscow was making more money now off its crude oil and gas sales than a couple of months before the war started.

The United States and the European Union agreed to ban imports of Russian oil and imposed escalating sanctions to punish the country for its invasion of Ukraine.

While those moves put a chill on global trade in Russian fossil fuels, they also helped to trigger a surge in global prices of oil and gas. Prices for Brent crude on Thursday were near a three-month high above $123 a barrel. read more

Hochstein said the global oil demand increase from consumers coming out of the COVID-19 pandemic was "far greater, stronger than anyone predicted."

At the same time, Russia has been able to sell more cargoes to other buyers, including major energy consumers China and India, by offering it at a discount to oil from other origins.

Hochstein said that while those Russian sales to China and India have been discounted compared with supplies from other countries, the global market price surge means Russia's revenue is likely higher now.

The International Energy Agency said in May that Russia's oil revenue was up 50% since the beginning of the year to $20 billion a month, with the EU taking the biggest share of its exports. The EU's ban on Russian oil, expected to take full effect at the end of the year, could cut that revenue.

India's purchases of Russian oil more than doubled in May from the previous month to hit a record high above 840,000 barrels per day and will likely rise again in June, according to commodity analysts Kpler.

Hochstein said he has asked Indian officials not to purchase too much Russian oil, and told them the United States cannot ban its purchases of the crude because it has not imposed secondary sanctions on those sales. Hochstein said he believes there is a "ceiling" to how much oil India will buy from Russia, without providing details.

When asked about his view on imposing secondary sanctions on countries like India, Hochstein said the most important thing is reducing Russia's revenue while mitigating the impacts of soaring fuel prices at home and on allies.

Hochstein praised new EU sanctions that target insurance of cargoes carrying Russian oil. "We'd like to see how we can use those sanctions to affect the broader market beyond the U.S. and Europe so ... nobody's profiteering."

While Russia provided about 45% of the EU's natural gas last year, Hochstein has been working to decrease that dependency by encouraging the diversion of shipments to the EU of liquefied natural gas (LNG) from the United States, Qatar and Australia. In the first four months of the year U.S. LNG shipments to Europe jumped 18% from the 2021 annual average.

Cutting Europe's fossil fuel demand will also help reduce dependency on Russia, and the United States is working with U.S. private companies and others to boost the region's use of smart thermostats to increase efficiency in heating and cooling, Hochstein said.