Indian refiners widen oil search as attacks hurt Russian flows

Indian refiners are reducing purchases of Russian crude due to disruptions from Ukrainian attacks on Russia's oil infrastructure. Russian crude has been the top supplier to India since the start of the Ukraine conflict in 2022, making up more than half of the country's crude imports. As Russian export availability declines, Indian refiners are turning to alternative sources, including West African and American crude, as well as Gulf suppliers, despite restrictions on flows through the Strait of Hormuz due to the US-Iran conflict.

This shift in buying patterns is also driven by an expected increase in domestic demand as plant maintenance ends, allowing refiners to increase production. In July, Russian crude accounted for over half of India's crude imports, but imports are now expected to fall to around 2 million barrels per day, down from a peak of 2.8 million barrels last month, according to Kpler's senior manager of modeling, Sumit Ritolia.

The decline is attributed to normalization after strong recent buying, lower Russian export availability, and increased competition from China. Indian Oil Corp., the country's largest refiner, has issued tenders for crude from various regions, including the Americas and the Persian Gulf, as another rare move. Industry peers Hindustan Petroleum Corp. and Mangalore Refinery & Petrochemicals Ltd. have also made swift purchases of non-Russian crude in recent weeks.

Ukrainian attacks on Russia's refineries and Black Sea ports have caused local fuel shortages and prevented Moscow from diverting crude into the export market, leading to a decline in overseas shipments to about 3.5 million barrels per day. India is also competing with China for discounted barrels, particularly for Sokol cargoes shipped from Russia's east.