As the effects of US-led Western sanctions on Russia for invading Ukraine change trade flows, India has pushed into a niche of the Russian oil market that China once dominated. India has taken a record volume of supplies of the Far Eastern grade.
Dealers and shipbrokers say that six vessels carrying the Russian crude known as ESPO had been despatched to refineries in India in August. That is approximately a fifth of all monthly shipments. It is the maximum cargo India has bought since the stream was first established.
“ESPO crude is now becoming a consistent flow for India, a nation that for years did not care much for the variety, “Emma Li, an analyst at Vortexa Ltd, said. “The trip to India will take longer, but shipments may still occur as long as the price remains alluring and no actual bans are in place to obstruct trade.”
In the wake of the invasion of Ukraine by Russia, India has emerged as a significant consumer of Russian energy, snatching up millions of barrels of discounted crude that Europe and the US have been avoiding.
India, the third-largest oil importer in the world, increased its imports of the flagship Urals crude, which flows from western Russia, while the crisis dragged on. Now, it is competing for ESPO, an east-bound, distillate-rich grade that consumers in China generally prefer.
The ESPO shipments going to India are cheaper than the nation's usual Middle Eastern grades and will likely replace some flows from Saudi Arabia and Abu Dhabi, the traders and shipbrokers said. They said that a recent dip in purchases by China's Sinopec freed up some volumes, enabling Indian buyers to swoop in.
The August shipments of ESPO are up from July's pace when five cargoes went to ports such as Vadinar, Sikka, Paradip and Mundra. Refiners such as state-owned Indian Oil Corp. and private processors Reliance Industries Ltd and Nayara Energy Ltd operate plants near those terminals.
Before this year's spree, India wasn't a prominent player in the trade, with local refiners citing factors such as ESPO's small cargo size of 100,000 tons being undesirable for the long and costly journey from Kozmino, where it's loaded. That had left North Asian nations such as China, South Korea and Japan competing for the 30 to 35 shipments dispatched every month.