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26 Mar, 2024 09:04

India buying more US oil amid Russia sanctions

Tighter enforcement of the restrictions has reportedly hampered New Delhi’s purchases of Russian crude
India buying more US oil amid Russia sanctions

Indian oil refiners are on track to buy the most US crude in almost a year as tighter enforcement of Western sanctions is slowing Russian deliveries to the world’s third-largest oil importer, Reuters reported on Monday.

Around 7.6 million barrels of oil are heading to India on three large crude carriers and three Suezmax tankers, the outlet said, citing ship-tracking data from Kpler. This would be the largest volume in more than a year.

The ships were chartered by India’s top private refiner, Reliance Industries, Dutch trader Vitol, and Norway’s Equinor, among others, and are expected to arrive in the country next month, according to data from financial firm LSEG.

Most of the US crude purchased this month has been West Texas Intermediate Midland, and the delivered cost is more expensive than oil from Russia or the Middle East, according to traders. Russia’s Sokol oil – which is comparable to WTI Midland – has been the most affected by the disruptions.

India and China have emerged as major buyers of Russian crude since Moscow redirected its cargoes from Europe eastwards following Ukraine-related sanctions. Since April 2022, India’s imports of Russian oil have soared more than tenfold, surging significantly after the G7 imposed a $60-per-barrel cap on seaborne Russian crude. Last year, Russia became India’s largest crude supplier, replacing Iraq, Saudi Arabia, and the United Arab Emirates.

However, recent deliveries to India have reportedly been hampered by payment and pricing issues stemming from Western sanctions. The US Treasury pledged in December to ramp up enforcement of the price cap on Russian crude exports in an effort to close loopholes.

The US and its allies have blacklisted a number of intermediaries and individual vessels, including some run by Russian state-owned tanker company Sovcomflot. Some of these tankers were reportedly already en route to India loaded with Russian Sokol grade.

Bloomberg reported earlier that while India has been looking elsewhere for oil, Chinese refiners have started snapping up cargoes of Russian oil that have been stranded off the coast of India due to sanctions.