India’s Russia Oil Trade May Dip Again, Stranding Cargoes at Sea

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(Bloomberg) —  

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India’s buying of Russian crude is likely to stabilize or even decline this month, leaving more cargoes from the OPEC+ producer stranded and pushing the world’s third-largest oil importer to look to pricier alternatives.

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Ship-tracking data and people familiar with the matter point to a dip that would come after imports fell in December to a three-year low. That was a third below their peak in June.

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The Trump administration has attacked India for months over purchases of oil that Washington says are supporting President Vladimir Putin’s war in Ukraine, and ultimately imposed punitive 50% tariffs. Trade talks between the two sides have yet to result in a deal, and the US is now considering a sanctions bill that would slap penalties on countries buying Russian hydrocarbons.

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That pressure has pushed India’s refining sector — which trails only the US, China and Russia in capacity — to reduce dependence on discounted Russian feedstock. As a result, tankers laden with the unbought barrels are increasingly idling at sea with nowhere to go. 

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“Russia remains a core pillar in India’s slate for now,” said Sumit Ritolia, a lead analyst for refining and modeling at data analytics firm Kpler Ltd. “But buying becomes more opportunistic, more diversified, and more compliance-sensitive as geopolitics and trade mechanics continue to evolve.”

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The country imported about 1.3 million barrels a day of Russian crude in December, according to data from ship-tracking firms Vortexa Ltd. and Kpler. January’s purchases are also under pressure and buying is likely to plateau at lower volumes than before, the people said, asking not to be named as the discussions are sensitive.

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Kpler’s Ritolia estimated levels will likely be around 1.2 million to 1.4 million barrels a day this month. Final levels, however, could ultimately end up lower than that, the people said.

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Indian refiners are adjusting their procurement patterns, becoming more active in the market for non-sensitive substitutes from the Middle East, West Africa and Latin America that can replace Russia’s flagship Urals blend, though at a higher cost. 

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Purchases from Saudi Arabia — the world’s biggest exporter — are higher than usual this month. Meanwhile, Indian Oil Corp., the biggest processor, recently purchased Ecuadorian Oriente crude for late March delivery in a rare transaction and issued two tenders this week with the option to purchase so-called sour grades that are closer in quality to Urals.