Indian refiners are set to reduce the number of spot market tenders for crude oil purchases next month as Russian supplies recover, according to a report by Reuters. Previously, Bharat Petroleum’s Chief Financial Officer disclosed that intermediaries supplying Russian oil halted cargo offers after the Biden administration imposed sanctions targeting Russian producers, tankers, and insurers. These sanctions affected Surgutneftgas and Gazprom Neft, two major Russian oil firms responsible for 25% of the country’s oil exports. In 2024, the two companies shipped an average of 970,000 barrels per day. Bharat Petroleum and other state-run refiners in India typically acquire Russian oil through the spot market, mainly via traders.
Freight costs for shipping Russian Urals crude from Baltic ports to India surged by 20% in February, reaching $7 million to $8 million per voyage, following the new U.S. sanctions on Russian crude. Reuters calculations indicate that Russia’s provisional February loading plan for western ports was revised upward by 19% to 1.9 million barrels per day. Meanwhile, Russian refineries are increasing crude oil processing to boost fuel exports despite the fresh sanctions.
Last month, India committed to increasing oil and gas imports from the U.S. as part of efforts to address the trade imbalance between the two countries. This pledge followed a visit by Prime Minister Narendra Modi to the U.S., where he met with President Joe Biden.
In another development, India’s oil demand growth in 2024 has outpaced China’s for the first time and is expected to do so again in 2025. According to Kang Wu, global head of macro and oil demand research at SPGCI, India’s oil demand grew by 180,000 barrels per day this year, surpassing China’s 148,000 barrels per day increase. Projections suggest that India’s oil demand will rise by 3.2% year-over-year in 2025, compared to China’s expected 1.7% growth rate.
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