Russia’s flagship Urals blend is trading at a $5 discount to dated Brent following the latest round of EU sanctions and President Trump’s decision to impose additional tariffs of 25% on Indian imports as punishment for India’s decision to continue buying Russian oil.
Following these latest moves by the EU and the U.S., Indian refiners started reducing their intake of Russian crude, which has affected prices, energy analytics provider Kpler reported this week, noting that Indian oil buyers were ramping up purchases of U.S. crude instead.
“Lower demand from Indian refiners is starting to have a strong effect, particularly from state-owned refiners, which are reportedly considering a full pause in imports of Russian oil,” Kpler said. The company added, however, that “On the other side, private players are still scooping barrels, but at a lower pace. Four Aframaxes are currently waiting to discharge at Jamnagar and Vadinar.”
It would be difficult for Indian refiners and oil traders to completely replace Russian supply, which has come to account for 37% of the country’s oil supply, according to Bloomberg. Still, Kpler analysts expect the downward trend for Urals to continue as Russian refineries enter maintenance season, increasing the availability of the crude, and “more risk-averse behaviour from Indian state-owned and private refiners” amid President Trump’s tariff actions.
Kpler suggests that the current spat between the U.S. and India could end with a commitment from the latter to buy more U.S. oil but judging by the official statements coming out of New Delhi, this is not the number-one choice for the Indian government right now.
India has already slammed the U.S. for the additional tariffs, which it has called “unfair, unjustified and unreasonable,” noting that “it is revealing that the very nations criticizing India are themselves indulging in trade with Russia.”
By Irina Slav for Oilprice.com
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