India lowers Russian oil imports over high prices in October, buys more from Saudi

India's Russian oil imports eased in October after discount prices narrowed, although supply from Saudi Arabia rose, according to preliminary data from ship tracking agencies Kpler and Vortexa. India, the world's third biggest importer and consumer of oil, has been binging on Russian oil sold at a discount after Russia faced sanctions by the West following its invasion of Ukraine last year.

Oil refiners in the country have slowed Russian oil imports in recent months from the nearly 2 million barrels per (bpd) peak seen earlier this year as discounts have narrowed, according to a report by news agency Reuters.

Data from Kpler and Vortexa showed a 12 per cent and 8 per cent decline in India's monthly intake of Russian oil in October from the previous month to 1.57 million bpd and 1.49 million bpd, respectively. 

Discounts for Russian oil have narrowed as global crude oil prices have risen following voluntary oil output cuts by oil majors Russia and Saudi Arabia. Oil prices have slipped about 5 per cent over the previous three sessions. WTI crude oil futures tumbled to $81 per barrel earlier, which supported bullish sentiments in global and domestic markets.

Indian refiners buy Russian oil on a delivered basis and pay for the cargoes after their discharge depending on the terms of the contract and volatility in crude oil markets push up the landed prices, according to the agencies.

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India's Russia oil imports were also hit by a month-long maintenance at Reliance Industries' refineries. The ship tracking agencies estimated a significant increase in India's intake of Saudi Arabia's oil in October as refiners catch up on term purchases.

Narrowing discounts on Russian oil push the oil refiners in India to increase purchases from Middle East producers and lift volumes committed under the annual deals. The refiners mostly have annual contracts with key Middle East producers such as Saudi Arabia.

Meanwhile, S&P Global Commodity Insights said that Indian refiners are likely to consider Venezuelan market to import discounted barrels. India used to be a regular buyer of Venezuelan crude oil grades prior to the imposition of US sanctions. 

During the pre-sanctions period from 2017 to 2019, India imported approximately 300,000 b/d of Venezuelan crude grades, with private refiners like Reliance Industries being the key buyers. These imports represented around 5 per cent-7 per cent of India's total crude oil imports during that time, S&P Global data showed.

"One of the driving factors that led Indian refiners to opt for these long-distance Venezuelan crude grades during those years was the discounted pricing offered by the Venezuelan producers," said Sumit Ritolia, refinery economics analyst at S&P Global.