India’s refiners are expected to import more Russian in September compared to this month’s levels as discounts are deepening amid Russia’s constrained refining capacity due to Ukrainian drone strikes, traders told Reuters on Thursday.
A few weeks ago, the biggest Indian state-owned refiners, including IndianOil and BPCL, pulled out of spot purchases of Russian crude for cargoes loading in October, after the U.S. announced an additional 25% tariff on India over its imports of crude from Russia.
The overall 50% tariff on Indian goods took effect on August 27.
Despite the hiked tariff, due to India’s continued purchases of Russian oil, Indian refiners are set to raise their imports by between 150,000 barrels per day (bpd) and 300,000 bpd in September, or up by 10-20% compared to August volumes, anonymous trade sources involved in the deals told Reuters.
Russia’s crude volumes for exports have jumped in recent weeks, as Ukrainian drone strikes on Russian refineries have crippled Russia’s processing capacity.
As a result, Russian sellers need India to ship more crude abroad and are again offering deeper discounts.
With difficult U.S.-India trade talks, the Trump Administration has singled out India to punish as a buyer of Russian crude.
Russia and India, however, have talked up their strategic partnership with high-level meetings and visits since the U.S. tariff threat, and have reiterated their strategic alliance and cooperation in the energy sector—a sign that India isn’t giving up on Russia’s cheap crude.
Due to stronger demand in India in September and October, crude arrivals will likely increase in the next two months, driven by higher inflows of Russian crude, said Ivan Mathews, Head of APAC Analysis at energy flow analytics firm Vortexa.
“We expect refineries in India to continue processing Russian oil, as their feedstock procurement decisions are mainly economics-driven,” Mathews wrote on Tuesday.