Days after cautioning Putin on war, India may skip Russian ESPO crude oil import

Indian refineries may skip purchasing Russia’s ESPO crude oil blend in September, apparently due to high freight costs.

India imports a mix of crudes from Russia, namely the Urals, Siberian Light, CPC blend and ESPO crudes. However, the share of ESPO crude oil is smaller in the mix.

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Importing ESPO crude costs $5-$7 a barrel more than comparable grades from other countries, such as UAE’s Murban grade, Reuters reported yesterday (Sept. 22), citing industry sources.

The move of India’s refineries comes two days after India publicly expressed its opposition to the invasion of Ukraine.

Before the war between Russia and Ukraine broke out in February, India barely bought any crude oil from Russia. However, given the high discounts Russia has offered since then, India, one of the world’s largest crude oil importers, has begun to take hold of almost all the qualities offered by Moscow.

What is a raw blend of ESPO?

ESPO crude oil is a light variant of crude oil, produced by the Russian Rosneft. It is shipped through the East Siberian-Pacific (ESPO) pipeline system and sold to the East Asian and US West Coast markets.

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Russian Ural quality, on the other hand, is usually sold to European countries.

India imported 666,000 barrels per day (bpd) of Ural oil in July, according to Kpler data, far more than the 145,000 bpd of ESPO oil it bought.

Overall, Russia’s ESPO exports have fallen from more than 800,000 barrels per day in July and August to 720,000 barrels per day in September, Kpler data shows.

India’s Alternatives to Russian Crude Oil

One reason Indian refineries are skipping ESPO crude could be rising inflation. They are turning to other oil-exporting regions such as Africa and western Asia, industry sources said.

The total share of African crude oil has risen significantly this month. India alone has loaded 2.35 million tons so far this month, compared to 2 million tons of Russian crude oil, Refinitiv data shows.

West Asian oil producers are also seizing this opportunity. Saudi Arabia, for example, lowered its sales prices in October.

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Besides, West Asian oil is better for India.

While deliveries from Russia take about a month, West Asian crude arrives within a week, according to Ehsan Ul Haq, an analyst at Refinitiv.

It is noteworthy, however, that some refineries from IndianOil Corp, Reliance Industries, Bharat Petroleum and Nayara Energy have reduced intake this month, mainly due to planned maintenance shutdowns.

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