India continues to buy large volumes of discounted Russian crude and is importing some of Russia’s Arctic crude oil varieties for the first time, taking advantage of cheap Russian cargoes to meet robust demand.
Indian refiners imported last month the first-ever cargo of the Varandey crude blend from the Timan-Pechora oilfields operated by Russian firm Lukoil, according to tanker-tracking data from Vortexa cited by Argus.
Since the Russian invasion of Ukraine, India—the world’s third-largest crude oil importer—has also bought cargoes of other Russian crude grades from the Arctic, such as Arco and Novy Port Light, Argus reported on Friday.
India is also scheduled to receive another four cargoes of the Varandey crude this month, per Vortexa estimates quoted by Argus.
Russia is now the single-biggest oil supplier to India after overtaking Iraq in November.
Before the Russian invasion of Ukraine, India was a small marginal buyer of Russian crude oil. After Western buyers started shunning crude from Russia, India became a top destination for Russian oil exports alongside China.
Russia overtook Iraq to become the single-largest oil supplier to India in November, as Indian refiners raced to stock up on Russian oil ahead of the December 5 price cap and associated bans on transportation services for Russia’s crude.
India and China are buying Russia’s Arctic crudes, which used to be sold in Europe before the EU embargo. Now, these cargoes are heading East to the two biggest buyers of Russian oil since the invasion of Ukraine.
In China, independent refiners have seen their refining margins jump in recent weeks as they have been able to negotiate steeper discounts for their preferred Russian crude grade, ESPO, even if they buy it above the G7 price cap.
While China hasn’t joined the Price Cap Coalition, the fact that a price cap now exists gives the world’s top crude oil importer, as well as other buyers of Russian crude such as India, more bargaining power to negotiate steep discounts for the Russian crude even outside the price cap mechanism, analysts say.