The year commenced on a positive note for the Middle East as Indian refiners topped up on crude oil supplies from their traditional suppliers, catapulting their share to a 27-month high.
According to energy intelligence firm Vortexa, Indian refiners continued their higher procurement from Iraq, Saudi Arabia, the UAE, Kuwait, Oman and Qatar for the second consecutive month.
Middle East’s share rose from around 51 per cent in December 2024 to 53.89 per cent last month — the highest since October 2022 (53.38 per cent), Vortexa data shows.
Middle Eastern cargoes
For comparison, the Persian Gulf countries accounted for around 51 per cent, 48 per cent and 69 per cent of India’s cumulative crude oil cargoes in 2024, 2023 and 2022, respectively, as per Vortexa data.
Analysts and market participants attribute the Middle East’s rising share in the past couple of months to a drop in Russian supplies.
However, Russian barrels also increased by 7 per cent M-o-M as Indian refiners used US sanctioned tankers to transport the cargo under the condition that they are loaded with crude oil before January 10 and discharged by February 27.
Ivan Mathews, Vortexa’s Head of APAC Analysis, told businessline: “India’s imports of Middle Eastern crude increased slightly m-o-m in January to 2.53 million barrels per day (mb/d). Meanwhile, India’s imports of Russian crude (excluding CPC and KEBCO) increased slightly m-o-m in January to 1.49 mb/d.”
Evolving dynamics
Mathews expects that Russian crude discharge into India could potentially rise in February as Russian oil tankers sanctioned earlier this month are allowed to discharge their crude at Indian ports until February 27.
“Significant loss of Russian crude supplies is unlikely, but Russian crude arrivals into India could be delayed/ reduced in March-April 2025. Indian refiners have been sourcing replacement barrels from the Middle East/ West Africa/ North America for March delivery, hence we could see more Middle Eastern crude being imported into India in the coming months,” he explained.
Towards the medium term, imports of Russian crude are likely to recover via the increased use of non-sanctioned vessels, he projected.
“In doing so, Russia’s crude will have to be priced at larger discounts to compensate for the higher freight costs. We expect Russia to continue exporting crude – albeit at bigger discounts – so as to maintain this source of revenue for the nation,” Mathews pointed put.
A top official with a domestic refiner said that India’s refining capacity is set to expand in the next 7-10 years in line with rising demand for refined products in the country and also for exports.
“So, refiners and policymakers are intensifying efforts to diversify the crude import basket to reduce over-dependence on a few supplying countries or regions. Prime Minister Narendra Modi’s maiden visit to Guyana is one such example,” the office added.