Indian refiners cumulatively imported 1.48 million barrels per day (million bpd) of Russian oil in December, down 11.6 per cent from the volumes delivered in November, as per Kpler knowledge. December import volumes had been the bottom since January 2023, when India’s Russian oil imports stood at 1.41 million bpd. In December, oil imports from Russia accounted for 32.9 per cent of India’s complete oil imports of 4.51 million bpd, adopted by Iraq (22 per cent) and Saudi Arabia (15.6 per cent). In November, India had imported 4.52 million bpd of crude, of which, 37.1 per cent got here from Russia, the info confirmed.

“Interestingly, the volume of Urals that Indian refiners are buying is roughly the same as it was before, around 1.1-1.15 million bpd. The big change this month was the absolute absence of Sokol imports. Indian refineries bought an average of 140,000 bpd of Sokol this year…December 2023 marks the first and only month in 2023 that India didn’t buy (any Sokol crude),” mentioned Viktor Katona, Kpler’s Lead Crude Analyst.

Sokol crude cargoes for India seem like grappling with a twin drawback. At least one of many idling tankers—NS Century—was sanctioned by the United States (US) for dealing in Russian oil above the Group of Seven’s (G7) worth cap of $60 per barrel. According to sources, the tanker was sanctioned whereas it was already on its approach to the Vadinar port. The different main drawback that has emerged is within the cost mechanism for Sokol crude.

According to commerce sources, Sakhalin-1 LLC—an arm of Russian oil main Rosneft—which provides Sokol crude to IOC, has not been in a position to safe an account within the United Arab Emirates (UAE) in an effort to settle for funds in dirhams.

Given that not all Indian banks are with the ability to course of funds in {dollars} for Russian crude, notably in circumstances the place it could be tough to show that the oil was purchased at a worth compliant with the G7 worth cap, India’s public sector refiners are actually opting to pay in UAE dirhams for such cargoes.

“The amassement of Sokol-laden tankers around India will most probably see a sudden resolution over the upcoming days. Of the six tankers that were idling around India’s coast, two have started to indicate Chinese final destinations. As the UAE banking delays of the Sakhalin-I project operator continue, effectively being unable to fully relocate the trading of Sokol cargoes into the relatively calm waters of the Dubai trading world, China might appear as the final solution for some cargoes,” Katona mentioned.

But it could be too early to “write off” India’s urge for food for the Far East Russian crude grade, Katona mentioned, as three tankers had been lately booked to move Sokol crude, and all three “indicate India as their final destination”. As per ship monitoring knowledge, two of the tankers are anticipated to unload Sokol crude on the Paradip port, and one on the Vadinar port.

In the aftermath of the conflict in Ukraine, as Western sanctions on Russia altered world crude oil flows, India and China emerged as the largest consumers of Russian crude, accounting for many of Moscow’s oil exports.

Prior to the conflict in Ukraine, Russia was a marginal participant in India’s oil imports. However, because the West started shunning Russian oil following Moscow’s February 2022 invasion of Ukraine, Russia began providing deep reductions on its oil to prepared consumers.

Indian refiners began lapping up the discounted barrels, catapulting Russia to the highest spot on the listing of India’s oil suppliers, displacing conventional heavyweights like Iraq and Saudi Arabia. India is the world’s third-largest shopper of crude oil and depends upon imports to satisfy over 85 per cent of its requirement.