India and China hike Russian crude deliveries amid Gulf supply bottlenecks: CAS

Russian crude flows into India and China were up strongly in the first week of March, as Middle East supply shut-ins have put renewed focus on alternative supply routes.

Deliveries of Russian crude to its three main buyers – India, Russia and Turkey – climbed to 21.7 million barrels in the week ending March 10, up from 20.1 million barrels the previous week, S&P Global Commodities at Sea data showed.

China accounted for the largest increase, importing 12.4 million barrels, up sharply from its 10.3 million barrels the previous week. India drew 8.6 million barrels, up by 200,000 barrels to hit a three-week high.

Turkey, meanwhile, saw a drop in the volume of Russian crude arriving at its ports on the week, receiving 700,000 barrels to its Aliaga port and its lowest volume in two months.

The rise in deliveries follows expectations of a growing call on Russian crude as a substitute for the heavy and medium sour grades produced in the Middle East Gulf, which remain largely inaccessible while ships avoid transiting the Strait of Hormuz.

Previously, India had been sharply reducing its Russian crude intake amid to sanctions pressure from the US and EU, importing its lowest volumes since 2022 in February and leaning more heavily on Persian Gulf supply.

However, after launching its "Operation Epic Fury" on Feb. 28, the US administration has since paved the way for India to absorb more Russian oil, issuing a 30-day sanctions wavier allowing it to import supplies already at sea. According to a report from the International Energy Agency on March 12, 30 million barrels of Russian oil crude currently sitting in tankers offshore India.

Leading importers on the week were the Nayara Terminal, home to the country's Vadinar refinery, the Reliance Jamnagar terminal, which tripled its weekly imports, and Paradip, CAS data showed. None of the terminal owners were available for comment.

The jump in buying activity has narrowed regional discounts for Russian oil to international crude benchmarks. Platts, part of S&P Global Energy, assessed the discount for Urals DAP India at $9.3/b below Dated Brent on March 11, narrowing from a $12.5/b on Feb. 27.

In China, meanwhile, higher import volumes follow a pattern of significant stockbuilding that occurred in the past year, amounting to an 111 million barrel stock injection, the IEA estimates. In the week to March 10, the Chinese ports of Zhoushan and Yangpu drew Russian oil for the first time in months, while Dongjiakou and Longkou -- both in the Shandong province -- remained key buyers.

CAS data showed at least 11 million barrels of Russian crude expected to discharge into India, China and Turkey in the week ending March 17. Of that volume, 5 million barrels are expected to land in India, followed by 4.5 million barrels for China and 1.5 million for Turkey.

Export volumes

As markets adjust to the ongoing supply shock in the Gulf, India has also attracted growing attention as a potential fuel supplier.

In the week to March 10, the country exported 6.8 million barrels of refined products, 1.2 million barrels higher than the previous week, but in line with recent levels.

A third of its fuel exports went to Southeast Asia, while West Africa was the second-largest recipient, CAS data shows. A million barrels of gasoil was dispatched to West Africa and South East Asia, respectively, while no product showed as inbound for the European continent.

The Reliance Jamnagar terminal, home to the country's largest refinery, remained by far the largest exporter, loading 4.8 million barrels more than double its volume the previous week. Roughly half its exports were diesel or gasoil, while 25% was gasoline or blendstock and 14% was jet fuel.

In the month of March to date, the Jamnagar terminal has exported 8.1 million barrels of clean oil products, with none bound for Europe. The main export markets were Southeast Asia (3.3 million barrels) and Africa (2.7 million barrels), CAS data showed.