India has pushed into a corner of the Russian oil market once dominated by China, taking a record number of shipments of a Far Eastern grade as the fallout from Moscow’s invasion of Ukraine reshapes trade flows.
Six vessels hauling Russian crude known as ESPO were headed to refiners in the South Asian nation in August, according to traders and shipbrokers. That is the highest number of cargoes bought by India since the stream was introduced, and accounts almost one-fifth of available monthly shipments.
“ESPO crude is now becoming a steady flow for India, a country that wasn’t a big fan of the variety for years,” said Emma Li, analyst at Vortexa Ltd. “The voyage to India will take longer, but the shipments might continue as long as the price stays attractive and there aren’t real sanctions blocking the trade.”
India has emerged as a key buyer of Russian energy in the wake of the invasion, scooping up millions of barrels of discounted crude shunned by Europe and the US. As the conflict has dragged on, the third-largest oil importer first ramped up purchases of the flagship Urals crude, which loads from the western part of Russia, and is now competing for ESPO, a distillate-rich grade that comes from the east and was typically favoured by China.
The ESPO shipments going to India are cheaper than the nation’s usual Middle Eastern grades, and is likely to displace some flows from Saudi Arabia and Abu Dhabi, the traders and shipbrokers said. A recent dip in purchases by China’s Sinopec freed up some volumes, enabling Indian buyers to swoop in, they said.
The August shipments of ESPO are up from July’s pace, when five cargoes went to ports such as Vadinar, Sikka, Paradip and Mundra. Refiners such as state-owned Indian Oil Corp., as well as private processors Reliance Industries Ltd and Nayara Energy Ltd operate plants near those terminals.
Before this year’s spree, India wasn’t a prominent player in the trade, with local refiners citing factors such as ESPO’s small cargo size of 100,000 tons being undesirable for the long and costly journey from Kozmino, where it’s loaded. That had left North Asian nations such as China, South Korea and Japan competing for the 30 to 35 shipments dispatched every month.
While India has been taking much more Russian crude this year, the US is pressing New Delhi to agree to a bold plan to cap the price of the country’s oil to deny revenues to Moscow. The initiative will be assessed on Friday by Group of Seven finance ministers, including Treasury Secretary Janet Yellen.