India turns to Saudi amid lower Russian oil imports
What's the story
In December, India saw a 4% increase in oil imports from Saudi Arabia, while oil purchases from Russia dropped to their lowest in 11 months due to payment issues, as reported by vessel tracking agencies.
This led the Indian Oil Corp (IOC) to tap into its reserves and buy from the Middle East to make up for the shortage caused by at least six redirected tankers of the Russian Sokol variant.
Insights
Declining oil imports from Russia
In December, India's imports of oil from Russia saw a decline ranging from 16% to 22%, as per calculations by Reuters using data from flow tracking agencies Vortexa, Kpler, and LSEG.
According to LSEG data, Indian imports of Russian oil decreased by 22% to 1.21 million barrels per day (bpd) in December, while Kpler's figures indicate a drop of 16% to 1.39 million bpd.
Details
Too soon to rule out India's interest in Russian oil
Kpler's lead crude analyst, Viktor Katona, mentioned that it might be too soon to rule out India's interest in the Sakhalin grade (Sokol), as three new Sokol cargoes are en route to India.
However, US sanctions on the NS Century ship for selling Russian oil above the $60 per barrel cap set by the G7 nations have left it stranded near Colombo, with China potentially buying some of the cargo.
Insights
Why are Russian oil imports declining?
Russian oil cargoes for India are facing two significant challenges.
Firstly, some tankers, like the NS Century, have been sanctioned by the US for trading Russian oil above the G7's price cap of $60 per barrel.
Secondly, the payment mechanism for Sokol crude, supplied by Rosneft's Sakhalin-1 LLC to India's IOC, encounters hurdles as the supplier hasn't secured a UAE account to accept dirham payments.
This issue arises as not all Indian banks can process dollar payments for Russian crude.