India’s imports of Middle Eastern crude have surged to more than half of its total oil purchases, as steep Gulf discounts and soaring freight costs make Russian supplies less competitive for Indian refiners.Middle Eastern crude accounted for 54% of India’s oil imports in September, up from 32% in August, while Russia’s share fell to 33.5% from 46.6%, according to ship-tracking data reported by Reuters. Russia nevertheless remained India’s largest individual oil supplier.The shift is reflected in purchases by state-owned Bharat Petroleum Corporation Limited (BPCL), which expects Russian crude volumes to decline significantly in November. Russian oil accounted for around 37% of BPCL’s crude sourcing during July-September.India increased Russian oil purchases when the US-Iran war disrupted Middle Eastern supplies. However, Gulf shipments have since recovered to prewar levels, with producers offering steep discounts to attract buyers.The conflict has driven up global tanker rates, making the longer voyages from Russian ports increasingly expensive. Average crude freight costs have risen nearly sevenfold over the past year, from around $3 per barrel to more than $20, according to Goldman Sachs. The bank cited war-risk premiums, higher fuel expenses, and costly ship-to-ship transfers.Freight costs for Russian Urals crude shipped to Asia reached around $30 per barrel or more in early October. Transporting a tanker shipment from Russia’s Black Sea ports to India currently costs $27 million-$30 million, compared with approximately $19 million in September, Reuters reported.Meanwhile, some Iraqi cargoes are being offered at discounts exceeding $25 per barrel against the Dubai benchmark before shipping, while selected Saudi shipments have been discounted by as much as $10, Bloomberg reported, citing traders. Russian crude, which previously sold at steep discounts, was being offered at around a $2 premium to the separate Dated Brent benchmark.“Due to the increase in freight, we are not getting good offers from Russia,” BPCL finance director Vetsa Ramakrishna Gupta told analysts on Monday.
Hindustan Petroleum Corporation Limited (HPCL), another state-owned oil company, is also adjusting its procurement strategy, increasingly buying crude on a delivered-price basis to manage shipping costs. HPCL Chairman Vikas Kaushal also confirmed that Gulf producers are offering discounts to offset the elevated freight rates.Indian Petroleum Minister Hardeep Singh Puri said on Tuesday that Middle Eastern supplies are increasing, and noted that Russian oil purchases depend on pricing and discounts compared with other grades.Asked whether Washington had pressured India to reduce Russian oil imports, Puri said, “I never felt anything.”
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