SINGAPORE, Nov 11 (Reuters) – India stepped up vacuum gasoil (VGO) exports to the United States this 12 months in an uncommon commerce stream for the oil product because the West seeks alternate options to exchange Russian provides, in response to merchants and knowledge analytics corporations.

The United States and Canada banned Russian oil imports over Moscow’s invasion of Ukraine, whereas sanctions from the European Union on Russian crude and oil merchandise imports will take impact on Dec. 5 and Feb. 5, respectively.

Meanwhile, India, the world’s third-largest oil importer, has been ramping up Russian crude imports and growing oil product exports to the West for increased margins.

In the newest transfer, world oil merchants Vitol (VITOLV.UL)
and Trafigura (TRAFI.UL) have purchased one cargo of VGO every from Indian refiner Nayara Energy (ESRO.M3) in tenders at premiums starting from $10 to $15 a barrel to Dubai crude quotes, market sources mentioned.

At these premiums, the cargoes, to load from India’s Vadinar port in December, are more likely to head to the United States or Europe, mentioned the sources.

Prior to this, Aframax tanker Shanghai Dawn loaded not less than 80,000 tonnes of VGO from Reliance Industries Ltd’s (RELI.NS) Jamnagar port, arriving within the United States in late October to early November, delivery knowledge from Vortexa and Refinitiv confirmed.

Nayara Energy, Reliance and Vitol didn’t reply to requests for feedback. Trafigura doesn’t touch upon particular person shipments, a spokesperson mentioned.

India’s VGO exports to the United States climbed in 2022 in contrast with final 12 months. Only one cargo loaded from India to the U.S. in May 2021, Vortexa knowledge confirmed, whereas there have been no such fixtures final 12 months in response to Refinitiv knowledge.

VGO is generally used as a refinery feedstock to supply different merchandise akin to gasoline and diesel. Russia was a key VGO provider to U.S. refiners earlier than the Ukraine battle broke out.

“Given that the U.S. is not buying Russian oil, they are looking for any and all alternatives,” mentioned Roslan Khasawneh, senior gas oil analyst at Vortexa.

“The unusual exports to the U.S. were also likely encouraged by Indian refinery maintenance and weak light distillate margins,” he mentioned.

U.S. and EU sanctions don’t apply to subtle merchandise produced from Russian crude exported from a 3rd nation as they don’t seem to be of Russian origin.

In India, refiners boosted imports of discounted Russian oil to 793,000 barrels per day between April and October, up from simply 38,000 bpd in the identical interval a 12 months in the past, commerce knowledge confirmed. Reliance accounts for about 23% of the purchases and Nayara’s share is about 3%.

List of vessels which have loaded VGO from India to the U.S. within the 12 months to this point:

(Source: Vortexa)

Reporting by Jeslyn Lerh; Additional reporting by Nidhi Verma in New Delhi; Editing by Florence Tan and Tom Hogue

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