India rivals China over Russian crude oil, prices rise

Singapore:

Indian private refiners jostle in China with independents for loading Russian ESPO crude in April, driving prices higher after Moscow slashed exports of its main Ural grade, industry sources said.

China, which will import record volumes of Russian crude in March, typically sweeps up all ESPO crude exported from the Pacific port of Kozmino due to its proximity, while sanctions against Russian oil have shrunk the number of buyers.

However, for April, Indian refiners Reliance Industries Ltd and Nayara Energy have taken in at least five of about 33 ESPO shipments of crude due to low prices, four people familiar with the matter said.

Reliance and Nayara did not immediately respond to requests for comment.

That’s more than one cargo for delivery in March, the first since purchasing three for November 2022, ship tracking data compiled by Kpler and Refinitiv showed.

One of the sources said prices for ESPO crude shipped to India in April were about $5 a barrel lower than from Dubai on a delivered ex-ship (DES) basis.

Indian refiners usually purchase Russian oil on a delivery basis, with the seller arranging insurance, freight and shipping.

While most shipments are below the price cap imposed by the G7 countries and the European Union, the prices of Russian low-sulphur oil bought by India have risen above $60 a barrel due to rising demand. China also bought ESPO above the price cap, according to Reuters calculations.

Indian companies use non-dollar currencies to arrange payment for some Russian crude and avoid using Western services and banks to avoid sanctions.

Competition from India has reduced rebates for ESPO shipments loading in April to about $6.80 a barrel by June ICE Brent DES base to North China from $8.50 a barrel last month for oil shipped in March is being loaded, according to three trade sources.

Comparable quality Murban crude from Abu Dhabi traded free on board at a premium of about $3.30 per barrel over Dubai rates.

By comparison, Murban crude that loads in April is about $9 a barrel more expensive than ESPO that supplies China and India, according to Reuters calculations.

ESPO crude oil exports by sea will average 800,000 barrels per day in 2022, Kpler data showed, accounting for 17.3% of total Russian seaborne exports.

Exports from Russia’s flagship Ural have averaged 1.74 million barrels per day, though Moscow slashed exports from its western ports by 10% in March from the previous month.

Meanwhile, China’s ESPO buying spree continues as the country emerges from its zero-COVID regime, fueling an uptick in fuel demand from industry and the travel sector.

China’s overseas imports of Russian oil will reach a record of nearly 43 million barrels this month, including at least 20 million barrels of ESPO.

Solid demand caused flat-rate freight rates for tankers carrying crude oil from Russia’s port of Kozmino, a major ESPO export hub, to northern China to rise to a record high of $2.4 million in February and fall to 2.4 million this month. $3 million, Simpson Spence Young data on Refinitiv Eikon showed.

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