Indian Oil Resumes Purchase Of Russian Crude Oil On Sovcomflot Tankers

Indian Oil Corp. has resumed purchasing Russian crude oil delivered on a tanker owned by Sovcomflot PJSC, marking a significant development in restoring oil flows between Russia and India. This move comes after tightened US penalties had previously disrupted shipments.

Indian Oil's shares experienced a 0.81% decline to Rs 171.95 on the BSE, while the stock also saw a 0.92% decrease to Rs 171.95 on the NSE.

The Suezmax tanker, Vladimir Tikhonov, recently discharged approximately 1 million barrels of Russian flagship Urals crude at Paradip port, where Indian Oil operates a refinery. This delivery represents the first tanker belonging to the Russian state tanker giant to deliver crude following a previous shipment by the SCF Baltica, which offloaded fuel oil last week off Sikka, Gujarat.

Indian Oil Corp.'s decision to accept crude oil from a Sovcomflot tanker holds particular significance as it may encourage other smaller refiners to also utilise Sovcomflot vessels for their oil purchases from Russia. Refiners in India, emerging as key buyers of Russian crude since Moscow's invasion of Ukraine, initially decided against receiving oil hauled on all tankers owned by Sovcomflot following stricter US sanctions imposed in February.

However, the landscape has evolved with new names in terms of traders and marketers handling the Russian crude trade with India, forming an ever-evolving network of transporters. Despite initial hesitations, Indian refiners have become more comfortable purchasing Russian crude, including on Sovcomflot tankers.

This shift in sentiment was bolstered by reassurances from US officials during their visit to New Delhi last month, affirming that they never expected India to cease buying Russian oil. The officials emphasised that it was in Washington's interest to maintain energy flow to prevent supply shocks.

In April, India's daily crude imports from Russia surged to over 1.9 million barrels, the highest since July, according to data from intelligence firm Kpler. Deliveries of Urals and Sokol, two key Russian crude grades, have seen significant increases month-on-month.

Furthermore, at least five Sovcomflot tankers carrying Urals are currently signalling India as their destination this month, with the tanker Suvorovsky Prospect anchored off the country's west coast, according to Bloomberg ship tracking data.

This resumption of Russian crude oil imports by Indian Oil Corp. on Sovcomflot tankers reflects a shift in the dynamics of the global energy market. Despite geopolitical tensions and sanctions, the demand for energy remains robust, highlighting the complexities of balancing geopolitical considerations with economic imperatives. As India continues to navigate these challenges, its energy partnerships and procurement strategies are likely to adapt to evolving geopolitical realities while ensuring energy security and economic stability.