India’s Russian Crude Purchases For April Slow, Discounts Widen To Three-year High
Prices of Russian Urals softened further in Asia as India reportedly slowed—if not entirely paused—the procurement of April-arrival cargoes amid uncertain policy guidance from New Delhi
Chennai: As Indian purchase of Russian crude for April arrivals slowed, the discounts on the crude widened to $11.9 per barrel against ICE Brent, highest level since June 2023. While Russian crude purchases have not stopped, Reliance, IOC, HPCL and BPCL have ramped up purchase of Venezuelan crude for April delivery at a discount of $6 per barrel, finds Kpler.
Prices of Russian Urals softened further in Asia as India reportedly slowed—if not entirely paused—the procurement of April-arrival cargoes amid uncertain policy guidance from New Delhi. No public confirmation or directive has been issued by the Indian government to refiners on whether the country will move away from energy trade with Russia following the trade deal with the US to lower tariffs.
Nonetheless, Nayara Energy is scheduled to take its 400 kbd Vadinar refinery offline for maintenance in April, and this will significantly reduce India’s demand for Russian crude. This led to discounts on Russian crude widening to -$11.9/bbl against Brent prices on a delivered-India basis from -$11/bbl last week, marking the weakest level since June 2023, according to Argus Media data.
Depending on whether India’s pullback from Russian crude proves to be a short-lived dynamic or a structural policy shift, this could lead to a build-up of Russian floating storage in the near term and force Moscow to cut oil production over the long run.
Meanwhile, India is ramping up purchases of Venezuelan crude following the US issuance of a general license lifting most trade restrictions. Privately owned Reliance is believed to have secured two Very Large Crude Carrier (VLCC) cargoes for April delivery, while IOC and HPCL jointly purchased 2 million barrels, with BPCL also heard to be taking a further 2 million barrels, also for April arrival. The deals were concluded with Vitol and Trafigura at around -$6 to -$6.5/bbl against ICE Brent on a delivered basis.
While Reliance had been a regular buyer of Venezuelan crude both before and during US sanctions on the Latin American producer under a special waiver, IOC had only taken one cargo previously. Neither BPCL nor HPCL has bought Venezuelan crude before, although the Bina, Kochi and Vizag refineries are equipped to process heavy grades.
“It remains to be seen whether Indian refiners will sustain this buying momentum, as it will hinge on economics and crude availability—both of which are partly shaped by procurement interest from US Gulf Coast refiners,” said Kpler.
