India Bursts Into Russian Oil Market, Once Dominated By China

India has become the biggest player of a market which was once dominated by China. Europe & US had avoided the ESPO but India grabbed the opportunity.

As the effects of Russia’s invasion of Ukraine changed trade flows, India has pushed into a niche of the Russian oil market that was once dominated by China and took a record amount of supplies of a Far Eastern grade.

According to dealers and shipbrokers, six vessels carrying the Russian crude called ESPO were en route to refineries in the South Asian country in August. 

That is approximately one-fifth of all monthly shipments and is the most cargo India has bought since the pipeline was first established.

According to Emma Li, analyst at Vortexa Ltd.,

“ESPO crude is now becoming a steady flow for India, a country that wasn’t a big fan of the variety for years. The voyage to India will take longer, but the shipments might continue as long as the price stays attractive and there aren’t real sanctions blocking the trade.”

After the invasion, India has become a significant consumer of Russian energy, buying millions of barrels of discounted crude that Europe and the US had avoided. 

The third-largest oil importer increased its imports of the flagship Urals crude, which flows from western Russia, while the crisis dragged on. 

Now, it is competing for ESPO, an east-bound, distillate-rich grade that was generally preferred by Chinese consumers.

According to the merchants and shipbrokers, some streams from Saudi Arabia and Abu Dhabi will likely be replaced by ESPO supplies to India because they are less expensive than the country’s customary Middle Eastern grades. 

Indian bidders were able to pounce on some volumes after China’s Sinopec recently reduced its imports, they claimed.

The pace of ESPO shipments in August has increased from July, when five cargoes were shipped to ports in Vadinar, Sikka, Paradip, and Mundra. 

Nearby those terminals are refineries run by private processors Reliance Industries Ltd. and Nayara Energy Ltd. as well as state-owned Indian Oil Corp.

India wasn’t a major player in the trade before this year’s buying binge, local refiners noting things like ESPO’s modest cargo size of 100,000 tonnes being unfavorable for the protracted and expensive travel from Kozmino, where it is loaded. 

As a result, countries in North Asia like China, South Korea, and Japan are now vying for the 30 to 35 shipments  sent out each month.