India is winning the competition with China to attract Russian crude cargoes with vessels turning mid-voyage away from their previous Chinese destinations and heading for India, as the U.S. waiver on purchases of Russian crude on tankers and the Middle East supply shock drive Indian refiners back to buying Russia’s oil.
The Aqua Titan crude oil tanker – which left Russia’s Baltic Sea port of Primorsk in mid-January and was signaling Rizhao in China as its destination – has made a U-turn in the South China Sea and is now headed to India’s Mangalore, with estimated time of arrival on March 21, according to tanker-tracking data from MarineTraffic.
At least seven tankers laden with Russian oil have changed mid-voyage their destinations from China to India, according to data from Vortexa cited by Bloomberg.
Russia and India are competing for millions of barrels of Russian crude stuck tankers early this year when most buyers outside China steered clear of Russian barrels because of the U.S. sanctions and the pressure on India to slash Russian oil imports.
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Now that the U.S. is allowing Russian crude sales, for all, and competition for Russian supply in Asia intensifies, the price of the key Russian grades have flipped to a premium to Brent prices compared to hefty discounts just a month ago.
Since the beginning of March, the volume of Russian crude on the water has fallen by more than 20 million barrels, which is equivalent to a drawdown rate of over 2 million barrels per day (bpd), David Wech, Chief Economist at Vortexa, said at the end of last week.
“As the current relatively empty space between Sri Lanka and Singapore suggests, India has also drawn in cargoes that were already heading towards China, as replacement demand from Indian ports is stronger and voyage economics are better,” Wech noted.
“The recent US waiver may have supported this shift, but the underlying driver is the closure of the Strait of Hormuz and the resulting shortage of nearby crude supply.”
By Tsvetana Paraskova for Oilprice.com
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