India’s Russian oil imports are poised to top one million barrels per day in December, trade and refining sources said, defying expectations for a sharp decline as refiners have resumed buying from non-sanctioned entities offering deep discounts.
Ties between the two countries have remained strong despite pressure from Western sanctions after Russian President Vladimir Putin met with Indian Prime Minister Narendra Modi earlier this month. At the time, the two leaders said their cooperation would continue.
After India - the world’s third-largest crude importer - shipped in 1.77 million bpd of Russian oil in November, up 3.4 per cent from October, according to data from trade sources, imports were expected to plunge due to Washington’s sanctions on two top Russian producers as some refiners slowed or paused purchases.
December arrivals are likely to exceed 1.2 million bpd, according to preliminary LSEG trade flow data, which could rise to an average of 1.5 million bpd by the end of the month, one trade source said.
Top refiner Indian Oil Corp is buying Russian volumes in line with pre-sanctions levels, two sources said. Bharat Petroleum has raised its January purchases to at least six cargoes from two in December, while Hindustan Petroleum is in talks for January loadings, sources said.
Private refiner Nayara Energy, which is majority-owned by Russian firms including Rosneft, continues to buy only Russian oil following the withdrawal of other suppliers after it was sanctioned by the EU and Britain.
Reliance and HPCL Mittal Energy have said they are halting Russian oil purchases.
India became Russia’s biggest seaborne crude buyer after the West imposed a raft of sanctions against Moscow for invading Ukraine. But those purchases became a liability in trade talks with the US, as President Donald Trump doubled import tariffs on Indian goods to 50 per cent.
"Thanks to President Trump's leadership, Russia has been forced to accept deep discounts and fewer buyers for its oil," a US official said. "These pressures are limiting the Kremlin's revenues and increasing the financial strain of sustaining its war."
To facilitate exports, Russian producers are using domestic market swaps - exchanging oil bound for local refineries with export volumes handled by non-sanctioned firms - to maintain flows to India without breaching sanctions, industry sources said.
Indian refiners are attracted by January prices that are discounted by about $6 per barrel to dated Brent, two or three times wider than in August, sources said.
(Reporting by Nidhi Verma in New Delhi and Reuters reporters in Moscow, additional reporting by Timothy Gardner in Washington; Editing by Thomas Derpinghaus)
