A surge in bookings for oil tankers to bring cargoes from the Middle East to India points to higher import flows ahead, as sanctions on major Russian producers force the South Asian importer to seek alternatives.
So far this week, roughly a dozen vessels have been chartered to ship crude from countries including Saudi Arabia, Kuwait, Iraq and the United Arab Emirates and ferry it across the Arabian Sea, according to shipbroker reports. That’s a jump from the same time last month, when about four fixtures were seen.
These bookings include supertankers known as Very Large Crude Carriers as well as smaller Suezmax vessels, for oil loading late November to December. Indian importers are still seeking even more tankers for the same routes, the reports show.
Oil traders have been closely monitoring India’s spot and term purchases of non-Russian crudes as they try to make sense of the Asian nation’s next steps, ahead of Nov. 21, when sanctions on Rosneft PJSC and Lukoil PJSC come into effect. While these fixtures are not necessarily exhaustive – bookings can be made through private negotiations – they reflect the broader purchasing patterns of refiners and as such provide a window into an opaque market.
The latest bookings are helping to push up freight rates, with daily costs of hiring an oil supertanker from the Middle East to Asia hovering near a five-year high.
Five of India’s seven refiners, including Reliance Industries Ltd., have said they would no longer take delivery of Russian crude after the wind-down period ends this week. The remaining companies are expected to continue considering purchases from non-sanctioned sellers.
India’s oil purchases through monthly tenders has showed a small increase in volume from usual patterns. However, the addition isn’t yet enough to make up for the possible loss of over one million barrels a day of Russian flows, according to traders participating in those tenders. This could be due to Indian refiners quietly seeking more supplies from term sellers across the Middle East, while others make spot purchases of prompt Kuwaiti crude, available after an unplanned outage at the Al-Zour refinery, they said.
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