India’s state-controlled and private refiners are expected to trim their near-term purchases of Russian oil as the U.S. is set to double tariffs on Indian goods to 50% as of Wednesday due to India’s imports of Russian crude.
The top state-owned refiners and private refiners, including Reliance Industries and Rosneft-linked Nayara Energy, are projected to book between 1.4 million barrels per day (bpd) to 1.6 million bpd of Russian crude for October loading, anonymous sources familiar with the plans told Bloomberg on Tuesday.
The volume of purchases from Russia for October would be up to 400,000 bpd below the average Russian oil imports of 1.8 million bpd for the first quarter.
The drop in Russian oil buying could be a slight concession to the U.S. tariff pressure, but it’s also a sign that Indian refiners don’t intend to halt the economics-driven trade to buy cheap crude, Bloomberg notes.
Despite continued pressure from the United States over crude supply from Russia, Indian state refiners have returned to the spot market for purchases of Russian oil, as discounts for Moscow’s crude grades deepened.
A few weeks ago, the biggest Indian state-owned refiners, including IndianOil and BPCL, pulled out of spot purchases of Russian crude for cargoes loading in October, after the U.S. announced an additional 25% tariff on India over its imports of crude from Russia.
The overall 50% tariff on Indian goods will take effect on August 27.
With difficult U.S.-India trade talks, the Trump Administration has singled out India to punish as a buyer of Russian crude.
Russia and India, however, have talked up their strategic partnership with high-level meetings and visits since the U.S. tariff threat, and have reiterated their strategic alliance and cooperation in the energy sector—a sign that India isn’t giving up on Russia’s cheap crude.
Due to stronger demand in India in September and October, crude arrivals will likely increase in the next two months, driven by higher inflows of Russian crude, said Ivan Mathews, Head of APAC Analysis at energy flow analytics firm Vortexa.
“We expect refineries in India to continue processing Russian oil, as their feedstock procurement decisions are mainly economics-driven,” Mathews wrote on Tuesday.
By Tsvetana Paraskova for Oilprice.com
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