Cheaper Russian crude is gaining popularity with buyers in Asia, squeezing producers in the Middle East and West Africa in energy markets and redrawing the global oil trade map, which is likely to remain in place for years to come.
India’s crude oil imports from the Middle East fell by 35% to 1.9 million bpd in April compared with January 2022, the month before the Russia-Ukraine conflict erupted, according to energy intelligence provider Vortexa. Crude oil imports from West Africa also fell 35% to 228,000 barrels per day. Meanwhile, India imported a record 1.9 million bpd of crude oil from Russia in April, up from 65,000 bpd in January 2022.
In the past four weeks to May 12, Russian seaborne crude oil shipments averaged 3.72 million barrels per day, the highest level since the media began tracking the data in early 2022, the data showed. In addition, Russian seaborne crude oil shipments to India averaged 1.39 million bpd in the past four weeks to May 12.
“As long as the price of Russian crude is low, this will continue,” said R. Ramachandran, former head of refining at Bharat Petroleum Corp. Prior to the Russia-Ukraine conflict, India had little demand for Russian crude. ”
India’s oil imports have traditionally relied on oil-producing countries in the Middle East such as Saudi Arabia, the United Arab Emirates, and Iraq. Now, India’s shift to importing lower-priced Russian crude oil has put pressure on these oil-producing countries. “Oil producers in the Middle East have every reason to worry that they may lose market share in Asia to Russia,” said Vandana Hari, founder of consultancy Vanda Insights in Singapore. “There appears to be no end in sight to the shift in trade flows.”
In addition, Vortexa data shows that China continues to receive a stable supply of crude oil from the Middle East, with crude oil imports rising slightly in April compared to January 2022. However, China’s crude oil imports from West Africa fell by more than 40% in April from January last year. Meanwhile, China’s crude oil imports from Russia rose 80% in April from January last year to around 1.5 million bpd.
Millions of barrels of West African crude have been stored at commercial facilities at South Africa’s Saldanha Bay hub this year, according to the International Energy Agency (IEA), as Asian buyers switched to buying Russian crude.