India Boosts Far East Russian Oil Imports as War Upends Trade Routes
India raised its purchases of Russia’s Far East crude blend ESPO in the first seven months of the year as China backed out of the spot market in the first months of the Iran war and deliveries to India from the Middle East slumped with the closure of the Strait of Hormuz. Total exports of the ESPO grade from Russia’s Far Eastern port of Kozmino rose by 6% in January-July from a year earlier,…
India has significantly increased its purchases of Russia's Far East crude blend ESPO in the first seven months of the year as China withdrew from the spot market following the start of the Iran war, and shipments from the Middle East declined due to the closure of the Strait of Hormuz. Russian daily Kommersant reported on Wednesday that total exports of ESPO grade crude from Russia's Far Eastern port of Kozmino rose by 6% from January to July compared to the same period last year, according to a report by Argus.
While China remained the primary buyer of ESPO crude, its share of shipments from Kozmino fell to 83% from 88%. Meanwhile, India's share of ESPO exports increased to 16% from 12% during the same period, according to data from Vortexa and Kpler cited in the report. The rise in Indian ESPO imports is attributed to logistics reasons and supply disruptions in the Middle East, which delayed many term cargoes that Indian refiners were expecting in early summer.
Dmitry Prokofiev, director of external communications at NEFT Research, stated that the increase in Indian ESPO imports is due to logistics and the Chinese pullback between April and June. ESPO remains a key feedstock for China's independent refiners, known as teapots, due to its high quality and short delivery times. Indian refiners, however, view ESPO as a backup option because of its higher costs and longer delivery times compared to their preferred Urals blend from Russia.
Indian refiners only increase their ESPO imports when China retreats or when there are supply disruptions, according to Prokofiev. Analysts suggest that India is not stealing China's ESPO share; instead, it has simply increased volumes in recent months that Chinese refiners would not purchase due to slashed total crude oil imports.
India's crude oil imports from Russia are estimated to have decreased in August from a record high in July, as Ukrainian attacks on Russian export infrastructure and competition from China for Russia's barrels have reduced Indian intake of Moscow's oil.
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