NEW DELHI, Feb 4: India's Russian oil imports slipped in January, continuing a downturn that began in December as refiners sought more alternative barrels under Western sanctions pressure and ongoing U.S.-India trade talks, Reuters sources said and data showed.
On Monday, U.S. President Donald Trump announced a trade deal with India to cut tariffs to 18% from 50% in exchange for New Delhi halting Russian oil purchases and lowering trade barriers.
Indian refiners have been redrawing crude import strategies in recent months to shift away from top supplier Russia and boost imports from the Middle East.
In January, India imported 1.215 million barrels per day (bpd) of Russian crude, of which the Nayara refinery accounted for 0.41 million bpd, IOC took 0.58 million bpd, and BPCL took 0.19 million bpd, while Reliance imported no Russian crude last month, according to provisional data from analytics firm Kpler.
India's Russian oil imports in January were down by some 12% on a daily basis from last December, Reuters calculations showed. December oil imports dropped about 22% from November to 1.38 million barrels per day.
While it remains unclear to what extent India may ultimately have to scale back its imports of Russian oil, any further reductions would make it increasingly difficult and costly for Moscow to secure alternative buyers for its crude, Reuters sources said.
Indian refiners have not been told by the government to stop buying Russian oil and would need a wind-down period to complete purchases already in process, two refining sources said on Tuesday, following the trade deal with Washington.
Reliance Industries Ltd, operator of the world's largest refining complex, will buy up to 150,000 barrels per day of Russian oil from February for its domestic market-focused refinery, a company executive said last week.
The country's largest refiner overall, Indian Oil Corp, has committed to buying more Brazilian crude in the fiscal year starting April, after reducing Russian oil imports.
India's reduction in purchases of Russian oil is affecting the freight market for its grades, as traders are increasingly using tankers to store Russia's Urals crude at seas.
Russia's total oil exports stood at 4.91 million bpd in December with China being the largest buyer of 2.3 million bpd of crude, according to the International Energy Agency.
Trump said India could buy more U.S. and Venezuelan oil to replace Russian purchases.
U.S. crude cannot replace Russian oil on a like-for-like basis due to quality differences, while Venezuela's exports are small, said Alexandra Hermann, Economist at Oxford Economics.
Crude from Saudi Arabia, the UAE and Iraq are more likely candidates to substitute Russian oil, said Yushkov. But deep discounts may still make Russian crude difficult to resist for Indian buyers, he added. "REUTERS
