India in oil pivot ahead of Putin visit

With the November 21 deadline now past, India's Russian crude oil inflows are easing but not collapsing as refiners pivot to non-sanctioned suppliers, tap alternatives and benefit from soft global prices

- SUDHEER PAL SINGH

The story of India's oil imports from Russia is playing out rather less dramatically than feared, now that the November 21 deadline for countries to stop importing oil from Russian entities such as Rosneft and Lukoil has passed.

The question of Western sanctions on Russian oil imports is set to figure prominently when President Vladimir Putin arrives in India today on a high-profile, 30-hour visit. India's oil imports soared when Russia began offering discounted crude to get around western sanctions imposed following Russia's February 2022 invasion of Ukraine.

But energy-hungry India must now taper its Russian oil imports following mounting Western pressure.

Fortunately, a variety of factors have come into play to ensure that while it is not 'business as usual' on Russian oil imports, predictions of a major hit to supplies or price shocks have not come true either.

Factors in favour of India's energy security include the option and freedom to source oil from non-sanctioned Russian entities, continuing handsome discounts on Russian crude, the possibility of securing not-so-costly oil from other regions like West Asia and Africa, and subdued global oil prices.

As far as November is concerned, Russian arrivals remained very strong, averaging 1.8 million barrels per day (mbpd) and accounting for more than 35 per cent of India's total crude imports. Before November 21, imports were closer to 1.9-2.0 mbpd as buyers moved cargoes ahead of the deadline. Volumes have slowed since then.

However, looking at December and January, there are clear signs of a dip in Russian exports to India. Based on current loadings and voyage activity, December arrivals are likely to be in the range of 1.0-1.2 mbpd, according to experts. This is broadly in line with the expectation that, in the short term, Russian flows could ease towards the 800,000 barrels per day (bpd) level before stabilising in a more comfortable zone.