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India's crude oil imports fell 6.6% YoY and 16% MoM in February 2024 to 18 million tonnes (MT), the lowest since September 2023. The sharp monthly drop follows the January record high. As refiners topped up cargoes to meet domestic consumption and take advantage of increased demand for refined goods in export markets, India imported 21.4 MT of crude oil in January, the most in the previous 20 months.
Furthermore, if Sokol shipments had not resumed last month, inbound cargoes would have been considerably smaller. According to Kpler, India bought about 97,229 barrels of Sokol per day (b/d) last month despite receiving no sweet crude supplies in December 2023 or January 2024 due to payment and sanction concerns.
Comparing crude oil cargoes for February in the last ten years, ending 2024, shows that shipments last month were the third highest since 2015. The highest shipments were recorded in February 2023 at 19.3 MT, followed by February 2020 at 18.6 MT. Also, during February 2023, import volumes from Russia were higher due to high discounts, with the erstwhile Soviet Union accounting for around 40 per cent of India’s total crude oil imports, making it the largest seaborne crude supplier to the world’s third-largest importer of the fourth straight month.
Crude oil prices also inched up monthly during February 2024. The price of Brent Crude averaged $83.93 per barrel (bbl) in February, against $80.32 a bbl in January and $82.49 in February 2023. The Indian basket’s price averaged $81.62 a bbl in February 2024 against $79.22 in January 2024 and $82.28 a bbl in February 2023.
In light of several changes, it remains to be seen how Russian imports will do in the coming months. It is anticipated that the drone attacks on Russian facilities will free up barrels for export. This development, however, coincides with the tightening of Western and US sanctions against vessels transporting Russian crude, especially those of the shadow fleets. Additionally, shippers choose the Cape of Good Hope (COGH) over the Red Sea route, which results in longer journey times and higher expenses.
Furthermore, Russian crude discounts have been steadily declining. Quoting the Centre for Monitoring Indian Economy (CMIE), JM Financial, in a March 17 report, said that the discount on Russian crude to India declined MoM to around $2 per barrel in January 2024, compared to $4 in December 2023, and far lower than the discount of $6-10 a barrel in H1 CY 2023.
However, Russia’s share of India’s crude imports recovered to around 38% in January against around 36% in December 2023. This is still lower than the 40-45% in May-August 2023 but significantly higher than the 20% in December 2022 and the 1-2% pre-Ukraine conflict, the brokerage added.
The growing obstacles to importing crude oil from Russia at lower prices could bounce in favour of India’s traditional suppliers, Iraq and Saudi Arabia. Trade sources said that March will be crucial for observing India’s barrel trade with the Middle East and Russia. Kpler’s Lead Crude Analyst pointed out that Russian crude oil flows to India have found a new equilibrium in the 1.5-1.6 million barrels per day (mb/d) range. India imported 1.54 mb/d of crude from Russia in February 2024.
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