Russian crude oil demand in India is declining

Singapore, Reuters - Two analysts and a trader said on Tuesday (0819) that Chinese refineries have purchased 15 ships of Russian crude oil, scheduled for delivery in October and November, as demand for Moscow exports in India has declined.

India has become the main buyer of Russian seaborne crude oil. Since some Western countries refused to purchase and imposed restrictions on Russian exports after Moscow's invasion of Ukraine in 2022, Russian crude oil has been sold at a discount.

However, due to the narrowing discount, Indian state-owned refineries suspended the purchase of Russian oil last month. In addition, US President Trump is also threatening to punish countries that purchase Russian crude oil.

Richard Jones, a crude oil analyst at Energy Aspects in Singapore, said that as of last weekend, China had locked in 15 ships of Urals crude oil from Russia for delivery between October and November.

Each ship of Urals crude oil (loaded from Baltic and Black Sea ports) ranges in size from 700,000 to 1 million barrels.

Data from Kpler shows that since August, China's imports of Urals crude oil have approached an average of 75,000 barrels per day, nearly double the average daily imports of about 40,000 barrels this year so far.

In a report dated August 14, Xu Muyu, a senior analyst at Kpler, wrote that China may have purchased approximately 13 ships of Urals and Varandey crude oil for delivery in October, as well as at least 2 ships of Urals crude oil for delivery in November.

Xu Muyu said that the additional supply of Russian Urals crude oil may suppress Chinese refineries' interest in Middle Eastern crude oil, which is $2 to $3 per barrel more expensive.

She explained that this could further pressure the Dubai market, as the market has lost momentum due to the decline in seasonal demand and increased competition from arbitrage supplies.

A trade source agreed with Kpler's estimate and added that these shipments were mostly booked by Chinese state and independent refineries at the beginning of this month.

China is the world's largest oil importer and the largest buyer of Russian oil. Due to its geographical proximity, it mainly purchases ESPO crude oil exported from the Russian Far East port of Kozmino. According to data from Kpler, China's imports of Urals crude oil so far this year have averaged 50,000 barrels per day. Urals and Varandey crude oil are usually shipped to India.

According to analyst Jones from Energy Aspects, Indian state-owned refineries have reduced their imports of Russian crude oil by about 600,000 to 700,000 barrels per day.

He pointed out, "We do not think China will absorb all the additional increase in Russian crude oil, because Urals crude oil is not a regular grade crude oil for China's major refineries." He referred to the fact that these Chinese state-owned refineries are not specifically designed to process this type of Russian crude oil.

Jones added that if the Ukraine peace agreement pushed by Trump breaks down, Chinese refineries will also be cautious about the possibility of U.S. secondary sanctions.

Trump said last Friday that he does not have to consider imposing retaliatory tariffs on countries such as China that purchase Russian oil immediately, but may have to do so "in a few weeks."

Original: www.toutiao.com/article/1840918733227019/

Statement: This article represents the views of the author himself.