India's crude oil imports from Russia plummet to 12-month low

India's reliance on Russian crude oil hit a 12-month low in January as the impact of stringent Western sanctions became evident. Preliminary ship tracking data revealed that crude oil imports from Russia, India's primary supplier, experienced a second consecutive monthly decline, reaching the lowest levels in a year. The supply of the light sweet Sokol grade, a significant contributor to India's imports, was particularly affected by the sanctions.

According to data from LSEG, imports from Russia dipped by 4.2% to 1.3 million barrels per day (bpd), while Vortexa's ship tracking agency reported a steeper decline of 9% to 1.2 million bpd. In response to the reduced Russian oil imports, India increased its intake of Iraqi oil to compensate for the shortfall, maintaining its status as the world's third-largest oil importer and consumer.

Serena Huang, Vortexa's Head of APAC Analysis, highlighted the diminishing appeal of Russian crude for Indian refiners due to the narrowing discounts compared to Middle Eastern alternatives. Recent U.S. sanctions targeting shipowners carrying Russian crude above a specified price cap, coupled with rising tanker premiums following Red Sea attacks, further contributed to the reduced attractiveness of Russian oil.

The decline in Indian imports of Russian crude may persist in the coming months, according to Huang. Last year, India had become a significant purchaser of discounted Russian oil following Western countries' cessation of imports after Moscow's invasion of Ukraine. However, the imposition of sanctions by Washington in December on vessels carrying Russian oil above a $60-per barrel cap set by the Group of Seven nations disrupted these shipments. As a result, several tankers meant for delivering Sokol crude to India were diverted.

Looking ahead, India is expected to receive at least five cargoes of Sokol crude in February, contrasting with none in January, as per LSEG data. The vessel Jaguar is slated to discharge at a facility of private refiner Nayara Energy in Vadinar port, Gujarat state, on Thursday, signaling potential adjustments in India's crude oil sourcing amid geopolitical and economic shifts.

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