Freight rates for shipping Russian Urals crude from Baltic ports to India surged by 20% in February, reaching between $7 million and $8 million per voyage. This increase followed the imposition of stricter U.S. sanctions on Russian crude. Russia’s loading plan for western ports in February was raised by 19%, reaching 1.9 million barrels per day, according to Reuters calculations earlier this month.
Russian refineries are processing more crude oil in hopes of boosting fuel exports amid the new sanctions. The sanctions specifically target two key Russian oil companies, Surgutneftgas and Gazprom Neft, which together account for 25% of Russia’s oil exports. In 2024, these two companies averaged 970,000 barrels per day.
“We must maximize oil processing to make use of the sanctioned oil,” a Russian industry source explained.
In response to the U.S. sanctions, middlemen supplying Russian oil have ceased offering cargoes. Bharat Petroleum’s CFO stated that the company and other Indian state refiners, which typically purchase Russian oil on the spot market, have not received new offers for March deliveries.
“We have not received any new offers for the March window. Traders are asking us to wait, so we are waiting for offers,” said Vetsa Ramakrishna Gupta of Bharat Petroleum. “We don’t expect the same number of cargoes as we received in December and January.”
In the meantime, the Indian government is exploring increased energy imports from the United States, coinciding with Prime Minister Narendra Modi’s visit and a planned meeting with U.S. President Donald Trump. Modi is set for bilateral talks with Trump during the visit.
India’s oil demand is expected to surpass China’s for the first time in 2024, with projections indicating this trend will continue into 2025. According to Kang Wu, the global head of macro and oil demand research at SPGCI, India’s oil demand grew by 180,000 barrels per day in 2024, outpacing China’s growth of 148,000 barrels per day. In 2025, India’s oil demand is forecast to grow by 3.2% year-on-year, compared to China’s expected growth of 1.7%.
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