MOSCOW: India was the biggest buyer of seaborne Urals oil in March and the country’s demand for the grade means Russia has to maintain high exports, two traders said and Refinitiv Eikon data showed on Monday.
Refiners in India, which in the past rarely bought Russian oil, because of high transport costs, have emerged as key oil clients for Russia, snapping up crude rejected by the West since the Ukraine conflict began in February 2022.
In March, India’s purchases of Urals oil accounted for more than 65% of total seaborne exports of Urals, Refinitiv data showed. Traders said the rising demand from Indian refineries is forcing Russia to support exports despite Moscow’s pledge to cut oil output.
Last week, Deputy Prime Minister Alexander Novak said Russia was very close to achieving its target of cutting crude oil output by 500,000 barrels per day (bpd) to around 9.5 million bpd.
In April, Russia may continue to maintain high oil exports to meet India’s refiners needs, traders said. Seasonal maintenance on Russia oil refiners will allow the state to do so.
Russian Urals oil loadings in March are expected to increase by 4% on February. “India is very actively buying Russian oil, it is profitable compared to alternatives. They ask for serious volumes and we need to deliver,” said a trader in the Russian oil market.
Demand from Indian buyers supported prices for Urals oil, traders said. The discount for Urals has declined by about $8 per barrel compared with mid-January, Novak said last week.
Traders said the rise in Urals oil loadings has tightened the tanker market, which is already facing constraints because of sanctions.
This is why shippers are using Suezmax tankers, designed for the transport of 130,000-180,000 tonnes, to ship 100,000-tonne cargoes from the Baltic ports.
At least 11 tankers from the March loading plan that loaded Urals cargoes from Baltic ports were Suezmax size vessels, according to the traders. The cost of freight for Suezmax and Aframax vessels remains the same due to a shortage of Aframax tankers, which typically carry around 70,000 to 120,000 tonnes.
The cost of Urals oil transport from Baltic ports to India rose this week to $8.5-8.7 million, two traders said.
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