India’s means to import extra Russian oil might have hit a restrict for the remainder of the 12 months, analysts inform CNBC, citing infrastructural and political constraints, in addition to limitations to Russian oil flows.

“India will look to continue Russian crude imports, but perhaps it has reached its limit, hampering any additional barrels,” in response to Janiv Shah, senior analyst at Rystad Energy.

Since the Kremlin’s invasion of Ukraine in February final 12 months, India’s refiners have been snapping up discounted Russian oil.

Moscow has since leapfrogged to develop into India’s main supply of crude oil, accounting for about 40% of India’s crude imports.

However, the amount of crude oil consumed and processed by India’s refineries has now hit a “seasonal peak” and would solely development downwards from right here, Shah informed CNBC in an e-mail. 

His sentiments have been echoed by commodity intelligence agency Kpler, which highlighted that along with refineries being at the moment shut, demand for oil is ready to trickle down too.

“For the first time this year, some of Indian refiners will be undergoing maintenance which was just not the case in January to May 2023 when there were no turnarounds at all. Everyone was firing on all cylinders,” mentioned Kpler’s lead crude analyst, Viktor Katona.

India’s monsoon season began in early June, and the summer time interval is commonly related to decrease demand for oil merchandise on account of decrease mobility and building, Katona added.

Fuel demand in India, the world’s third largest oil shopper, often enters a lull through the four-month monsoon season. India’s complete oil demand in June slipped 3.7% month-on-month to 19.31 million tonnes, in response to data from India’s Petroleum Planning and Analysis Cell.

However, June nonetheless marked the tenth consecutive month-on-month improve in India’s imports of Russian crude, Kpler’s information confirmed.

“An unprecedented feat in recent history, especially given the volumes in question — 2.2 million barrels per day in June,” Katona mentioned.

And that is the very best quantity that India’s imports of Russian oil can go — no less than for the remainder of the 12 months, in response to his predictions.

“I would say 2.2 million b/d will be the peak this year … We believe India’s imports of Russian crude will see a slight downward correction to two million barrels per day. That will be the sustainable level of buying,” he mentioned.

And it appears the restrict goes each methods.

Flows popping out of Russia have a “finite limit,” mentioned Daniel Hynes, senior commodity strategist at ANZ.

“Any additional supply coming out of Russia … that flows into Asia, I suspect it’s done. It’s maximum amount now,” he added. 

Russian oil exports fell 600,000 barrels per day to 7.3 million barrels per day in June — the bottom since March 2021, in response to a recent report by the International Energy Agency.

Russia additionally pledged to trim its crude oil exports earlier in July.

“India has talked about the inability to really pick up significantly additional cargoes from Russia,” Hynes added.

However, that is to not say that India’s refiners won’t try and attempt for one more all-time excessive import of Russian oil subsequent 12 months, mentioned Kpler’s Katona.

“Most probably in the March-to-May period again,” he mentioned, declaring that demand at the moment shall be “unrestricted from the Indian side and Russian export availability will be once again boosted by refinery turnarounds.”

However, India wants to take care of its relationship with different exporters too, particularly key suppliers within the Middle East.

According to Rystad information, 55% of India’s latest seaborne medium bitter imports have been from Russia, whereas imports from the Middle East sank to a “historic low of 40%.”

“India may be approaching a limit in its reliance on Russian crude, as it would still need to secure long-term supply agreements with Middle Eastern suppliers,” Shah mentioned.

Crude import from the Middle East area dropped 21.7% to eight.68 kilo tonnes in June in comparison with the beginning of the 12 months, information from Refinitiv confirmed.

Medium bitter crude provides to India have a tendency to return below annual time period contracts, which have minimal buy agreements.

“Technically, the Indians could be buying more, but they don’t want to antagonize the Middle East too much,” mentioned Kpler’s Katona. “Politics matter, too,” he mentioned. 

However, Indian consumers are notably price-sensitive, and will nonetheless forsake different international locations’ crude for Russia’s on the proper worth.

“Indian refiners can always take more Russian [crude] at the expense of other grades, e.g the Middle Eastern ones, if the price disparity widens,” mentioned director of Refinitiv Oil Research in Asia, Yaw Yan Chong.

Russian exports to India have soared greater than 10 occasions since February final 12 months, capturing from a pre-invasion common of simply 350,000 metric tonne per 30 days to a post-invasion common of 4.57 million metric tonne per 30 days from March 2023 onwards, he mentioned.

Yaw expects India will nonetheless pursue Russian imports at elevated ranges “for as long as Russian [crude] are under [sanction] and shunned by their traditional European buyers.”