India Splurges on Russian Oil as Sanctions Threat Begins to Fade

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(Bloomberg) — Indian refiners have splurged on Russian crude in the last two months and expect to continue buying at current lofty levels for the rest of the year, as the country navigates a Middle East supply crunch and the threat of US sanctions begins to fade.

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Executives at leading refiners said they expected a US waiver allowing the purchase of Russian oil to be extended before it expires in the coming days. But purchases are unlikely to drop back even without that, given a dearth of supply options, they added. They asked not to be named as the issue is sensitive. 

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Imports from Russia averaged 1.98 million barrels a day in March, the highest since June 2023, according to data from intelligence firm Kpler. The figure has dipped in April to an average of 1.57 million barrels a day — but that’s largely because Nayara Energy’s 400,000 barrel-a-day refinery, which runs largely on Russian crude, has shut down for maintenance. Volumes are expected to pick up again from next month, the executives said.

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“India is grabbing all the Russian crude it can get its hands on,” said Vandana Hari, founder of Singapore consultancy Vanda Insights. “I expect India to continue maximizing Russian intake as long as its flows from Persian Gulf remain crimped.”

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The world’s third-largest oil importer went from taking only a fraction of its crude from Russia to becoming the largest seaborne buyer after the invasion of Ukraine in 2022, as India seized on prices that became heavily discounted as others pulled away. That all changed last year, when US President Donald Trump began applying pressure on India to stop, introducing punitive tariffs and finally sanctioning Moscow’s top two producers.

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US and Israeli strikes on Iran and the subsequent closure of the Strait of Hormuz have again changed that calculus for all sides. Washington is eager to dampen oil prices, while India is rushing to secure supply. A first waiver allowing Russian oil purchases was issued in early March, and that has already been widened and extended.

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After the first waiver, India bought about 60 million barrels for delivery this month. 

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Russian crude had been building up on water in the later half of last year, as India stayed away for fear of incurring more oprobrium and tariffs from Washington. Volumes reached a peak in early January at around 155 million barrels, according to data intelligence firm Vortexa, compared to around 93.2 million in the middle of last year.

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That figure is now at 100 million barrels on water — a number that may include cargoes that already have buyers — close to what was last seen a year ago.

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The US Treasury has also issued a waiver allowing temporary access to seaborne Iranian oil, and India has said publicly that it will take Iranian crude as one of its options. Refiners, however, report limited success when turning to those alternatives, in part because of concerns over suppliers and other intermediaries.

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Since the six-week war in the Persian Gulf began India, which imports about 90% of its crude and depends on flows through Hormuz, has faced shortages, surging prices and the prosepct of slower growth. It has also struggled to secure liquefied natural gas, a commodity Russia has been offering to Asian buyers, despite lingering sanctions. The shipments were being offered at a 40% discount to spot prices last week.

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—With assistance from Weilun Soon.

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