Indian refiners expect Russian oil supplies to further tighten in October and November due to reduced exports and stiff competition from China, forcing the world's third-largest crude importer to buy more costly alternatives for the rest of the year, four trade sources said.
India has been the top buyer of seaborne Russian Urals crude since 2022, when Moscow diverted its energy flows away from Europe at deep discounts.
However, in recent months, the world's top crude importer China has ramped up purchases as supplies from the Middle East tightened due to the Iran war.
Some Indian refiners would not be getting adequate Russian supplies in October and November, people familiar with procurement plans said.
"Demand from China has been really high. They were willing to book cargoes in advance and to pay firmer prices compared to Indian refiners," a source involved in the sale of Russian crude said.
Russian oil arrivals to India are set to fall to around 1.75 million barrels per day in September, the lowest since April, according to analytics firm Kpler.
They had already declined 16.5 per cent to about 2.1 million bpd in August from July, trade data showed, although Russia remained India's main supplier, ahead of the United Arab Emirates and Venezuela.
Overall Russian export availability has contracted, notably from the Black Sea port of Novorossiysk, where shipments have fallen by roughly half as drone attacks repeatedly suspended loadings.
Indian refiners have turned to pricier replacement barrels, traders said, seeking UAE Murban, a close substitute for Russia's Urals grade, while also purchasing Iraqi Basrah and Angolan cargoes.
Shipping dynamics have helped redirect flows, with seasonal navigation along the Arctic Northern Sea Route (NSR) providing a secure and cost-effective channel for Russian crude exports to China. In contrast, shipments to India via the Red Sea face heightened security risks linked to the conflict involving Yemen's Iran-aligned Houthis.
"It's not so much about the price as ensuring the cargo actually reaches its destination," a second trader said, adding that freight costs via the Arctic route to China are now broadly comparable with shipments through the Suez Canal.
(Reporting by Nidhi Verma in NEW DELHI and Reuters reporters in MOSCOW; Editing by Florence Tan and Kirsten Donovan)
