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The discount of Russian oil exported to India has tightened considerably, from some $30 to Brent crude last year to as little as $4 per barrel, Eurasia Daily Monitor has reported, adding that shipping costs, on the other hand, have increased.
Per the agency, the shipping costs per barrel of Urals sent to India now vary between $11 and $19, which Eurasia Daily Monitor says is higher than the shipping costs for oil imported from other countries at similar distances.
Meanwhile, Indian media reported that imports from Russia in the period between April and July doubled to $20.45 billion. This has turned Russia into India’s second-largest supplier of foreign goods, with oil and fertilizers making up the biggest share.
In oil, Russia’s share of the Indian import market has ballooned from less than 1% last year to as much as 40% this year.
That said, imports of Russian crude oil into India last month dipped and the decline could deepen this month, Kpler predicted recently as Russia pledged to reduce exports in line with OPEC+ efforts to support prices.
In July, crude imports from Russia into India, the world’s third-largest oil importer, dropped to 2.09 million barrels per day, down from 2.11 million bpd in the previous month, Viktor Katona, head of crude analysis at Kpler, told Bloomberg earlier this month.
At the same time, expectations that the narrowed discount of Urals to Brent would dampen India’s appetite for Russian crude appear to have been wrong.
“There was a perception that India had limited capacity to refine medium sour grade of Russian crude, which would create a natural ceiling on Russian imports,” a Citi analyst told Bloomberg this month.
“It has now been clearly demonstrated that such a bottleneck does not exist. This would imply that Indian refiners can continue with their Russian oil imports as long as discounts outweigh the higher logistics cost of imports,” Samiran Chakraborty, chief India economist at the Wall Street bank, also said.
