India's oil imports hit 5-month high in December on low Russian supply

Industry Outlook Team | Tuesday, 24 January 2023

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According to government, India's imports of crude oil reached a five-month high in December as refiners stocked up on cheap Russian fuel in response to a steady rise in domestic consumption. According to information from the Petroleum Planning and Analysis Cell, crude imports for the month increased 2.7% from November to 19.52 million tonnes. Imports decreased by 0.7% in December compared to the same month last year. With shipments of a record 1.25 million barrels per day in December, Russia remained India's biggest oil supplier (bpd). Imports of oil products increased from 3.74 mn

tonnes in November to 4.12 million tonnes in December. Diesel accounted for 2.41 million tonnes of the 5.83 million tonnes in exports that also increased. "While Europe/the G7 purchase its crude/refined goods from other nations, Russia sells its oil to other customers (mainly in Asia). Oil in transit on tankers has significantly increased as a result of the rerouting of these flows, "Giovanni Staunovo, an analyst at UBS, stated.

"If the discount stays in place, I would expect India to keep buying Russian crude (and refined products) as long as it is allowed." The European Union has agreed a full ban of Russian oil products imports from February 2023 in an attempt to cut Russia's revenues for its war in Ukraine.

"Selling its crude in Asia is Russia's only alternative. Buyers are setting the price for this crude as a result "said Ehsan Ul Haq, a Refinitiv analyst. Meanwhile, increased industrial activity and an increase in gasoline consumption helped India's fuel demand hit a nine-month high in December. According to a government notification dated January 16, India has reduced its windfall tax on crude oil and the exports of aviation turbine fuel (ATF) and diesel. India, the third-largest economy in Asia, has excess refining capacity and also exports refined fuels.