Russia secretly turns to India for its crude needs

Russia has begun importing petrol from India amid severe local shortages caused by Ukrainian attacks on its refineries, according to Bloomberg. This marks the first instance of Moscow sourcing motor fuel from India, with the lengthy journey indicating the gravity of the situation. The initial shipment arrived on August 5, and additional consignments may follow.

Nayara Energy Ltd., a domestic processor backed by Rosneft, Russia's leading oil producer, is providing the fuel. It is transported via a series of Russian-linked tankers through transshipments off Egypt.

Analysts view the emergence of Indian barrels as particularly significant, as they supplement imports from Belarus and other neighboring markets, underscoring the severity of Russia's domestic petrol imbalance and the impact of reduced refinery operations on traditional product trade flows. The global energy market faces challenges due to disruptions from conflicts in Ukraine and the Middle East, leading to tighter fuel supplies.

In response, Russia, a major fuel exporter, has suspended petrol and diesel exports to ensure domestic availability.

Ukraine's attacks on Russian refineries have resulted in a significant decrease in processing rates, with EA Analytics estimating at 3.6 million barrels per day in July, about a third below the seasonal average. Since then, strikes by Ukrainian forces have intensified, targeting five processors last week and at least two more this week.

Since July last year, when Russia faced sanctions from the European Union, Nayara Energy has relied on dark-fleet tankers and transshipment operations for receiving crude and exporting fuels. Its Vadinar refinery on India’s west coast, with a capacity of 400,000 barrels per day, must expand its export market after a key buyer, Hindustan Petroleum Corp., increased its domestic fuel production.

The inaugural shipment consisted of 42,000 tons of petrol loaded onto the Cyclone tanker from Vadinar on June 18 and transported to the Oman-flagged Garnet at Damietta Port in Egypt by July 6. Further shipments may be forthcoming, with another products tanker, the Varg, loading nearly 40,000 tons of fuel at Vadinar on July 6, potentially transferring the cargo at Damietta.