India (Commonwealth) _According to tanker-tracking data analyzed by the media on Tuesday, the stricter implementation of the G7 sanctions and associated payment concerns have been delaying Indian purchases of some cargoes of Russian crude oil. As a result, tankers that were previously bound to India are now turning back east.
The G7 price ceiling of $60 per barrel, over which cargoes cannot employ Western insurance and finance, was violated by numerous boats, and the United States took a stronger position on sanctions against Russia at the end of last year. Some of those tankers had already left Russia’s Far Eastern ports for India, where they were carrying Russia’s Sokol grade.
According to preliminary tanker tracking data, Russia’s crude oil exports to India fell to less than 1 million barrels per day in November for the first time in 13 months. This decline was caused by increased freight costs, stricter compliance with sanctions, and a reported disagreement over rupee payments for Moscow’s crude from its largest buyer.
Russia’s largest consumer of seaborne crude last year was India, surpassing China, with shipments reaching a record of over 2 million barrels per day in May as Indian refiners snatched up cheap Russian oil. S&P Global Commodities at Sea reports that Russia’s average monthly shipments to India in November were just 892,000 b/d, a 47% decrease from the average of 1.53 million b/d this year.
As Russia assets more non-G7 shipping capacity in order to avoid the G7’s $60/b price cap on its exports, the discounts for Russian crude arriving at Indian ports are narrowing, and medium sour crude values are continuing to rise globally as a result of OPEC+ production cuts. These factors correlate with the sharply lower flows to India.
The discount for cargoes arriving on the west coast of India is still $4.10/b, the narrowest difference since Platts, a division of S&P Global Commodity Insights, started analyzing the situation in January, despite the fact that Urals FOB prices have lately declined in relation to Dated Brent.
Traders stated that recent actions by the US and the UK to crack down on sanctions breaking in the shipping sector and EU plans to toughen compliance rules for transporting crude added to freight costs. Initially, freight costs raised due to a tight tonnage list and low availability of dirty tankers.
With the West concentrating on stepping up enforcement, some significant tanker operators that are required to adhere to the G7 price restriction system have pulled out of the Russian market. According to Reuters on November 24, citing unidentified merchants and statistics, three major Greek tanker operators have ceased delivering Russian oil in recent weeks in order to escape the penalties now placed on certain maritime firms who do so.
According to CAS statistics, Minerva Marine, Thenamaris Ship Management, and TMS Tankers have transported 607,666 b/d so far in November, which is 30% less than the average of 868,137 b/d for the third quarter.
The decline in Russian crude imports by India coincides with news that the Russian central bank has decided not to accept rupee payments for oil exports, which was a compromise reached earlier this year as part of Russian efforts to avoid trading in dollars because of Western sanctions. Media wrote on Nov. 27 that the Russian central bank said it was “pointless” to receive revenue in a non-convertible currency with limited value outside of India, citing unidentified Russian financial sources.
According to the article, India is now paying for its imports of Russian oil using a combination of the Chinese yuan, the UAE dirham as a temporary fix to the current problem, and the Hong Kong dollar as a transition currency into the yuan.
