Russian Oil Is No Longer an Easy Bargain for India

Russian oil for longer is becoming a harder proposition for Indian refiners as August imports fell and Chinese buyers took more cargoes. The supplied figures do not include a USO price quote, so no ETF price move can be stated. Russian crude was trading at parity with dated Brent or a small premium to ICE Brent.

August imports fell despite a light maintenance season

India brought in 2.08 million barrels per day of Russian crude in August, down from 2.8 million barrels per day in July and back to the level recorded in May. Total crude imports slipped to 4.7 million barrels per day from 5.05 million. Even so, August’s overall intake was the highest for that month in five years and exceeded the five year August average of 4.2 million barrels per day.

Refinery maintenance usually reduces crude buying as the monsoon season winds down and domestic fuel use eases. This year, however, strong margins on refined products have persuaded most Indian refiners to delay planned work. BPCL’s Mumbai refinery had scheduled maintenance for September but reportedly shifted it to November. At CPCL’s Manali refinery in Chennai, only partial maintenance and shutdown work may happen in the coming weeks.

MRPL is the notable exception. It shut its 60,000 barrel per day CDU I unit for four weeks, with a return expected toward the end of September. Taken together, the scheduled work suggests a lighter autumn maintenance period than in previous years. That makes refinery downtime an incomplete explanation for the August decline in imports.

Domestic fuel demand has offered little sign of a seasonal slowdown either. July diesel use reached 8.09 million tonnes, while petrol demand was 3.82 million tonnes. Both were about 10 percent above the same month a year earlier. August demand was also expected to remain higher year over year after monsoon rainfall came in about 15 percent below normal, its lowest level since 2009. The dry conditions sustained irrigation needs and limited the usual fall in road activity.

Russian oil for longer depends on export availability

The clearest constraint is a reduction in Russian supply. Seaborne exports from Russia fell to 3.7 million barrels per day in August from 4.1 million in July. The drop was concentrated at Novorossiysk on the Black Sea. Loadings increased at Kozmino, which ships ESPO crude, and at Ust Luga, but the gains did not offset the decline at the Black Sea port.

Novorossiysk had become India’s second largest Russian crude departure point since April 2026. In August, shipments from there to India dropped to 616,000 barrels per day from 800,000 in July. Security concerns have complicated navigation in the Black Sea, where Ukrainian drone attacks have threatened Russian vessels, ships operated by US companies and the Caspian Pipeline Consortium terminal.

The CPC facility handles Kazakh crude and has faced several attacks. Its loadings were suspended for several weeks. The disruption adds uncertainty for buyers relying on routes through the region, even when the crude itself is available.

Transport costs also favor some routes over others. Shipping a Suezmax cargo from Novorossiysk to India’s west coast now costs about $20 million, or roughly $20 per barrel. A comparable voyage from Baltic ports costs about $13 million, or $13 per barrel. Baltic shipments are cheaper, but Russian tankers traveling around Europe face the risk of detention or seizure by European countries.

Those hazards have encouraged more use of the Northern Sea Route. August and September are typically its busiest months because ice is thinnest then. With Black Sea risks adding pressure, exporters are sending more vessels north. The route’s economics make China a more competitive destination than India for some Russian cargoes.

China is bidding for more Russian barrels

Chinese crude purchases rose to 7.4 million barrels per day in August, up from 6.9 million in July and a June low of 6.0 million. Its imports from Russia climbed to 1.7 million barrels per day from 1.4 million in July. More Urals cargoes are now going to China instead of India, tightening the contest for supply.

Russia is also trying to keep more crude at home for refining as fuel shortages persist. A growing number of plants are restarting after Ukrainian drone strikes, increasing the need for feedstock inside Russia and leaving less oil available to export.

Chinese buyers have another reason to seek Russian supply. Iran has been drawing down floating crude storage near the Chinese coast and Singapore, inventories that China had recently been able to purchase. The US Navy’s effective blockade of the Iranian fleet at the Strait of Hormuz makes replenishment unlikely in the near term, adding to Chinese interest in Russian barrels.

India is broadening its supplier mix

India has increased purchases from some alternative suppliers, but several routes face their own constraints. The United Arab Emirates remained the country’s second largest crude supplier in August. Saudi Arabian deliveries fell, while Iraq, Kuwait, Brazil and Venezuela supplied more than they had in July.

Saudi shipments have been affected by the closure of the Bab el Mandeb Strait in late July. Cargoes bound for the Suez route are mostly heading to Europe. Gulf shipments also have to pass through Hormuz and use ship to ship transfers near Fujairah, a costly and risky path.

Iraq supplied India with almost 1 million barrels per day before the crisis, but its flows nearly vanished in March and April. The August recovery to 165,000 barrels per day, alongside Kuwait’s return at 90,000, shows that some regional supply is coming back. Brazil and Venezuela together contributed 450,000 barrels per day, up from 420,000 in July, as India gradually widens its sourcing options.

Can India secure Russian crude for longer?

September presents a difficult buying environment. Asian fuel margins remain high, with little apparent reason to retreat until refining operations in China, South Korea and other processing centers return to pre crisis volumes. Instability around Middle Eastern maritime chokepoints is also limiting regional crude availability and pushing buyers to compete for cargoes with dependable delivery.

Russian crude at parity with dated Brent, or at a small premium to ICE Brent, suggests the discount that once made it an obvious alternative to Middle Eastern barrels has largely disappeared. August may prove to be a temporary setback, but the combination of lower Russian exports, stronger Chinese demand and higher transport risks points to a more unsettled autumn for Indian refiners.

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