Indian state refiners may buy Mideast spot oil to replace Russian shortfall
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Indian state refiners may buy Mideast spot oil to replace Russian shortfall
NEW DELHI (Reuters) - Indian state refiners are considering tapping the Middle East crude market as spot supply from their top supplier Russia have fallen, three refining sources said, in a move that could support prices for high-sulphur oil.
The refiners fear continued problems in securing Russian oil in the spot market could continue in the coming months as Moscow's own demand is rising and it has to meet commitments under the OPEC pact.
However, they added that they can draw from their inventories to meet crude processing needs in March.
Two of the sources said their company may lift more crude from Middle East suppliers under optional volumes in term contracts or float a spot tender for high-sulphur oil.
IOC, the country's top refiner, previously floated spot tenders to buy sour grades in March 2022.
The companies did not immediately respond to requests for comment.
India became the largest importer of Russian crude after the European Union, previously the top buyer, imposed sanctions on Russian oil imports in response to the 2022 invasion of Ukraine. Russian oil accounts for more than a third of India's energy imports.
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Russia's spot crude exports have fallen since November as its refineries resumed operations after the maintenance season and poor weather disrupted shipping activities, traders said.
"We have to explore alternative grades as Russia's own demand is rising and it has to meet its commitments under OPEC," said another of the three sources.
Russia, an ally of Organization of the Petroleum Exporting Countries, promised to make extra cuts to its oil output from the end of 2024 to compensate for overproduction earlier.
The new deal accounts for roughly half of Rosneft's seaborne oil exports from Russian ports, leaving little supply available for spot sales, sources told Reuters earlier this month.
India has no sanctions on Russian oil, so refiners there have cashed in on supplies made cheaper than rival grades by the penalties by at least $3 to $4 per barrel.
Sources said there are traders in the market that are willing to supply Russian oil for payments in Chinese Yuan but noted that state refiners stopped paying for Russian oil in the Chinese currency after advice from the government last year.
"It is not that alternatives to Russian oil are not available in the market but our economics will suffer," the first source said.
