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India, the world’s third-biggest oil importer, has been diversifying its sources of crude oil to reduce dependence on the Middle East and to take advantage of lower prices. Russia, the world’s largest oil producer, has been looking to expand its market share in Asia as the US and Europe impose sanctions on Moscow.
The increased purchases from Russia come as India looks to diversify its crude oil imports, which have traditionally been dominated by Middle Eastern countries. The country is also looking to reduce its dependence on oil imports and boost domestic production, but in the meantime, the availability of discounted Russian crude presents an opportunity for Indian refineries to acquire a more cost-effective feedstock. It is unclear how this potential increased oil imports from Russia will affect the relationship between the two countries.
It is worth noting that the increasing demand for Russian oil from India and China is also driven by the need for diversifying their oil import sources and reducing dependence on traditional suppliers such as the Middle East. As the EU ban on seaborne Russian fuel shipments comes into effect, it may lead to more discounted barrels being available to India and China, potentially increasing their imports further.
This is known as “back-to-back trading,” where one country sells the crude oil to another country and then buys refined products from that same country. This allows the refiner to take advantage of discounted crude prices and sell the refined products at a higher price, resulting in higher profit margins. Additionally, the EU sanctions on Russian seaborne fuel shipments may create an opportunity for India and China to increase their imports of Russian crude oil.
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This means that Indian processors will continue to have regular and consistent oil supply from countries like Saudi Arabia, but they will also be open to buying additional oil from Russia on a short-term and as-needed basis, depending on the price and availability of the oil. This allows for more flexibility and potentially more profitable opportunities for the Indian processors.
This increase in Russian fuel oil imports to India highlights the potential for India to become a major outlet for Russian oil, as other buyers may be deterred by the EU sanctions. However, it should be noted that Indian processors will still maintain their long-term supplies from other producers, with any increase in Russian purchases being done on a spot and opportunistic basis. This means that the amount of Russian crude purchased by India will depend on the pricing and availability of the oil.
(“This story remains unedited by News360Express staff and is published from a syndicated feed.”)