India’s monthly Russian oil buying has fallen since hitting a record high in June.New Delhi: Indian refiners are set to skip purchases of Russia ESPO crude oil this month due to higher freight rates, turning to Africa and the Middle East instead, industry sources said.India, which rarely used to buy Russian oil, has emerged as Moscow’s second biggest oil customer after China since Moscow’s invasion of Ukraine in late February.Refiners have been snapping up nearly all grades of Russian crude, taking advantage of discounts after some entities in the West halted purchases.However, higher prices are set to cool off demand, channeling supplies to China.”On net back basis after factoring in the freight, the landed cost of ESPO is turning out to be $5-$7 a barrel costlier in comparison to similar grades from other countries such as UAE’s Murban,” said an industry source familiar with the matter, adding that Russian oil has previously been cheaper.Instead of ESPO, Indian companies are buying other grades such as those from West Africa that give better yields, he said.The price gap between Brent and Dubai benchmarks has also narrowed, opening the arbitrage window for Atlantic Basin grades to Asia.African Volumes UpIndia’s monthly Russian oil buying has fallen since hitting a record high in June.About 2 million tonnes (14.35 million barrels) of Russian crude have been loaded for India so far this month versus 3.55 million tonnes of August, including 585,090 tonnes of ESPO crude, Refinitiv data showed on Thursday.In contrast, India has loaded 2.35 million tonnes of African oil so far this month versus 1.16 million tonnes in August, the data showed.Overall, India is likely to lift less crude in September due to planned maintenance shutdowns of units at some refineries operated by companies including Indian Oil Corp Reliance Industries, Bharat Petroleum and Nayara Energy.Middle East producers have also cut official selling prices for their supplies in October, hitting the appeal of Russian oil, said Ehsan Ul Haq, an analyst with Refinitiv.While supplies from Russia to India takes about a month, Middle Eastern crude arrives in a week, he added.Shiptracking data from Kpler showed that all but one seaborne ESPO cargo for September departure are heading to China.Russian ESPO exports in September slipped to 720,000 barrels per day (bpd) from more than 800,000 bpd in July and August, the data showed.”ESPO from the Far East is a short-haul journey for China and freight rates have also risen. So China is taking more oil from the Far East and not so much from Baltic or Black Sea ports,” Haq said.Russia’s local crude processing has also increased, curtailing supplies for export, he said.(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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