New Intermediaries Boost Russian Oil Supply to India

As US sanctions target major Russian oil companies like Rosneft and Lukoil, new intermediaries are making their way into the Indian crude oil market. The sanctions, which took effect on October 22, have significantly impacted the share of these companies in oil shipments to India. By December, their contribution plummeted to just 17.4%, down from over 70% in previous months.

Amid this backdrop, lesser-known suppliers such as Redwood Global Supply and Alghaf Marine are stepping in to fill the gap. These intermediaries, previously not involved in supplying crude to India, are based largely in the United Arab Emirates (UAE). The lack of publicly available information about these entities raises questions about their operations and reliability.

Despite the sanctions, Russian oil continues to be a crucial component of India's energy imports. In fact, Russian crude has been a primary source for India over the past three years. The price competitiveness of Russian oil, especially since it’s offered at discounts, has attracted Indian refiners, making them more reliant on these imports.

Industry experts suggest that while direct imports from Rosneft and Lukoil have decreased dramatically, the overall demand for Russian oil remains robust. As new intermediaries enter the market, it is anticipated that Russian oil volumes reaching Indian ports will gradually recover, provided that these newcomers do not attract US scrutiny or face secondary sanctions.

The complexity of sanctions is highlighted by the distinction that while Rosneft and Lukoil are sanctioned, Russian oil itself is not. This means that Indian refiners can still source Russian crude as long as they avoid any involvement with the sanctioned companies and can prove the oil's origin.

December saw Russian oil imports to India drop to approximately 1.2 million barrels per day, a three-year low. Yet, with intermediaries like Redwood Global and Alghaf Marine dispatching significant volumes, there is potential for recovery. Experts predict that as supply chains adjust and adapt to the new landscape, Russian oil will continue to hold a structural presence in India’s crude slate.

As of December 30, Russian oil loadings for Indian ports were recorded at 1.3 million barrels per day. While this is down from November, the presence of new suppliers suggests that the landscape of Russian oil imports to India is evolving. With shipments rerouted through various intermediaries, the future of Russian crude in India remains promising.