Key facts
- India's imports of Russian crude oil, including ESPO, decreased in August after a period of increase.
- Overall crude imports for India also fell in August.
- Russian crude exports declined in August, with reduced shipments from the Black Sea port of Novorossiysk.
- China's demand for crude and Russian imports increased in August, leading to higher prices for ESPO.
- Security concerns in the Black Sea are impacting Russian crude shipments and increasing transportation costs.
India's imports of Russian crude oil, including the ESPO blend, saw a decrease in August following a period of increased purchases. This shift occurred as overall crude imports for India also declined, with Russia's share diminishing due to heightened competition from China for available cargoes and security concerns impacting Black Sea shipments. Chinese refiners are now paying record premiums for ESPO crude, further influencing global trade flows.
Normally preferring the Urals blend, Indian refiners have increasingly turned to ESPO as a backup option during times of disruption, despite longer transit times and higher costs. However, security concerns in the Black Sea, including Ukrainian drone attacks on Russian export infrastructure, have led to increased shipping costs and risks, impacting the viability of certain routes. This has also contributed to a drop in overall Russian crude exports.
In response to changing supply dynamics, India is diversifying its crude sources, increasing imports from the UAE and gradually from countries like Iraq and Kuwait, alongside supplies from Brazil and Venezuela.