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Crude oil exports from Russia to India could reach a new record this year if prices and other terms remain favorable, the Times of India reported, citing experts.
The upcoming EU embargo on seaborne diesel imports from Russia could also contribute to higher exports of crude to India, where it will be refined into fuels and exported to the European Union.
Russia used to be a minor exporter of oil to India until last year when EU sanctions in response to Russia’s invasion of Ukraine led to a re-routing of Russian oil flows. China became one of the biggest buyers of Russian crude, and India, which relies on imported crude for more than 80 percent of its consumption, was also an obvious alternative destination for Russian crude.
Discounts caused by the West’s sanction action increased the attractiveness of Russian oil for Indian buyers, and Russia came to account for about 15 percent of India’s total oil imports last year. That was up from about 1 percent of total oil imports just a year earlier.
Saudi Arabia and Iraq remained the two largest suppliers of crude to India last year, but Russia came in third. The overall share of OPEC oil in India’s crude oil import mix fell as a result of these changes to the lowest in a decade, Reuters reported earlier this month.
According to refining industry executives who spoke to the Times of India, Saudi and Iraqi oil flows will continue under long-term contracts. Additional purchases of Russian barrels will be made on an ad hoc and opportunistic basis.
“It’s bit of a circular trade going on as India takes Russian crude that Western buyers don’t want and refining it into products for resale to the West,” Rystad Energy’s head of downstream oil trading, Mukesh Sahdev, told Bloomberg this week.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.