A combination of discounts, operational ease and geopolitical leeway is aiding Russia’s position as India’s top seaborne crude oil supplier in the second half of the current financial year maintaining its hold over one-third of the cargoes procured by the world’s third largest importer.
However, India’s traditional suppliers in West Asia are also prepping up to ship more cargoes, largely on the back of more supplies coming online due to gradual winding up of the voluntary production cuts.
The volume will largely be shaped by seasonal refinery maintenance in India and the growing competition for barrels between Russia, Middle East and the US, trade sources said.
However, Russian volumes could face pressure in the coming months, particularly post June, as some refineries that were hit by drone attacks may come back online thereby absorbing additional barrels from the market.
Sumit Ritolia, Kpler’s Lead Research Analyst for Refining & Modeling, emphasises that refining economics and operational margins drive buying decisions. Whether oil comes from Russia, the US, or Gulf, if economics align and logistics are viable, Indian refiners will seize the opportunity.
He pointed out that Russia holds a significant pricing advantage that is aiding exports. For instance, India imports in June are on pace to reach 2 million barrels per day (mb/d).
“Russia offers crude at consistent discounts compared to global benchmarks like Brent and Dubai, and even more so against Middle Eastern grades on a landed-cost basis. This economic edge, combined with operational ease and geopolitical leeway, has made Russian barrels an attractive proposition for Indian refiners,” he explained.
A key driver has been the Urals grade, which, though not deeply discounted, averaged around $50 per barrel FOB (Free on Board) in May, well below the $60 price cap imposed by Western allies.
These favourable economics have not only improved refinery gross margins but also drawn in substantial shipping capacity; over 20 tankers previously tied to non-sanctioned trades were repurposed for Urals delivery, boosting export flows, Ritolia pointed out.
“Despite ongoing sanctions, lax enforcement has allowed steady trade to continue. Looking forward, Russian crude is expected to maintain a 35-40 per cent share in India’s crude mix, assuming margins stay healthy, FOB pricing remains competitive, and sanctions remain loosely applied,” he added.
However, modest headwinds are emerging, Ritolia warned.
Kpler data indicates Russian refinery throughput may rise by 100,000–300,000 b/d in the coming months, potentially trimming available export volumes and softening flows to India beyond May.
A trade source said that Middle East barrels will compete to some extent with the US WTI during the remainder of the current calendar year.
“Murban is currently cheaper than WTI for August. With the winding back of production cuts, availability will increase. We expect Iraq and UAE to continue to challenge American barrels,” the source added.