Bharat Petroleum, one of the largest refiners in India, has bought a cargo of Emirati Upper Zakum crude, as it seeks alternatives to Russian oil, Reuters has reported, citing unnamed sources.
The cargo is 2 million barrels, to be delivered next month. Bharat Petroleum bought it on the spot market, where it previously mostly bought Russian crude, at the same rate of around 2 million barrels monthly.
Reports of Indian refiners buying non-Russian oil cargoes have become frequent in the past couple of weeks, following Washington’s decision to impose sanctions on two of Russia’s biggest oil exporters, Rosneft and Lukoil.
The two together handle about half the country’s crude exports, a big portion of which goes to Indian refiners. While the news initially caused a small price shock, the effect quickly evaporated as it became clear that there are ways around the sanctions, such as buying Russian crude from non-sanctioned entities and, ultimately, changing the supplier, even at a higher cost.
Indian Oil Corp., for instance, last week bought as many as five cargoes of Russian crude oil for December delivery from non-sanctioned sellers. IOC is the largest refiner in India, and the purchase signals there are still ways to buy Russian crude without violating the latest sanctions, aimed at draining Russia’s energy export revenues, widely assumed in Washington to be the only source of funding for the war in Ukraine.
Other Indian oil processors, meanwhile, are buying crude from elsewhere, including the Middle East, the Americas, and West Africa. That oil often costs more than Russian crude, which, thanks to the sanctions, sells at a discount, but at least there is supply, even if the bills end up higher.
This could become an issue over the longer term. India imports over 80% of the oil it consumes, meaning it is quite sensitive to price increases on global markets or, in the case of sanctions, the need to switch from cheap to costlier crude.
By Irina Slav for Oilprice.com
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