Asian rush for crude raises India's oil costs

INDIA MAY STRUGGLE to replace disrupted crude supplies without incurring higher costs as Asian refiners compete for alternative barrels in a tightening global market, according to Zhuwei Wang, director of research & analysis at S&P Global Energy.

- SAURAV ANAND

“India will unlikely to find alternative supplies without pushing costs higher as the country is competing with other Asian countries to find replacement barrels for Middle East crude,’ Wang said, highlighting the risks to India’s supply chain amid escalating geopolitical tensions.

India has significantly increased its dependence on Russian crude since 2022, with around 35-40% of its crude imports now sourced from Russia, compared with less than 2% before the outbreak of the Ukraine war. Russian oil imports to India had climbed to around 1-1.5 million barrels per day (bpd) in recent months as refiners capitalised on discounted supplies.

However, shipments from Russia fell sharply after US sanctions announced in November last year, before stabilising somewhat following a recent US waiver allowing certain Russian cargoes to continue flowing to India.

Wang said replacing Russian or Middle Eastern crude barrels will not be straightforward.