Tepid Chinese demand sends more Russian crude to India

The lukewarm demand for crude from China has led to more Russian crude coming to India. Russian crude seaborne arrivals in China fell to 1.2 mbd in June, a 7-month low, with early indications that arrivals could fall further in July. Meanwhile, Russian crude imports into India exceeded 1.9 mbd in June, the highest level since July last year. Most of this increase has been driven by private refiners, with their imports of Russian crude rising by almost 30% month-on-month. India’s import momentum could continue this month as more Russian shipments from the Far East are expected to arrive in India, offsetting the decline in Russian Urals imports.

Despite the narrowing discounts on Russian crude, it remains a more attractive commodity compared to Middle Eastern grades from Saudi Arabia and the UAE. The average delivered price of Russian crude to India in May was $84/bl, a discount of $3/bl and $11/bl compared to the average delivered prices of UAE and Saudi crude respectively (India Ministry of Commerce and Industry). However, Russian crude was more expensive than some other sources, including Iraq, Kuwait and Brazil. Tighter Russian crude exports this month would inevitably lead to weaker supplies in August and September, but also push Russian crude prices higher.