Russia will keep selling as much oil as it can to India despite the rebound in Chinese demand, according to commodity-data firm Kpler.
India purchased almost no Russian oil a year ago, but has become a crucial market after the US and European Union imposed sanctions on Moscow. India imported around 1.85 million barrels a day from Russia in February, close to its potential maximum of about 2 million barrels a day, said Viktor Katona, lead crude analyst at Kpler.
While China could “buy literally the entire Russian oil exports” as it abandons Covid-zero policies, Russia will want to keep the Indian market because it is more lucrative and gives its crude sellers greater control, Katona said.
Last month, Russia exported 2.3 million barrels a day of crude to China, according to the International Energy Agency. The Asian giant's oil demand is set to grow by about 900,000 barrels a day this year after travel restrictions imposed during the pandemic ended, the IEA estimates.
Chinese refiners may want to buy more Russian crude this year, but they also have the capacity to do their own shipping. That would deprive Moscow of income from the “parallel gray fleet” of tankers it has established to is deliver crude to India, Katona said.
The journey to India is also shorter. A tanker spends 35 days on average to get to India from Russia's western ports, compared with 40 to 45 days to China, Katona said.
Russia's largest producer Rosneft PJSC also has a stake of 49.13% in Nayara Energy Ltd., which owns the Vadinar refinery, the second-largest facility in India, and related shipping facilities. The Vadinar plant has already taken almost all of its crude feedstock from Russia this month, Katona said.
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