India’s Russian oil imports hit 11-month low in Dec as Sokol cargoes dry up |

Indian refiners cumulatively imported 1.48 million barrels per day (million bpd) of Russian oil in December, down 11.6 per cent from the volumes delivered in November, as per Kpler data. December import volumes were the lowest since January 2023, when India’s Russian oil imports stood at 1.41 million bpd. In December, oil imports from Russia accounted for 32.9 per cent of India’s total oil imports of 4.51 million bpd, followed by Iraq (22 per cent) and Saudi Arabia (15.6 per cent). In November, India had imported 4.52 million bpd of crude, of which, 37.1 per cent came from Russia, the data showed.

“Interestingly, the volume of Urals that Indian refiners are buying is roughly the same as it was before, around 1.1-1.15 million bpd. The big change this month was the absolute absence of Sokol imports. Indian refineries bought an average of 140,000 bpd of Sokol this year…December 2023 marks the first and only month in 2023 that India didn’t buy (any Sokol crude),” said Viktor Katona, Kpler’s Lead Crude Analyst.

Sokol crude cargoes for India appear to be grappling with a dual problem. At least one of the idling tankers—NS Century—was sanctioned by the United States (US) for dealing in Russian oil above the Group of Seven’s (G7) price cap of $60 per barrel. According to sources, the tanker was sanctioned while it was already on its way to the Vadinar port. The other major problem that has emerged is in the payment mechanism for Sokol crude.

According to trade sources, Sakhalin-1 LLC—an arm of Russian oil major Rosneft—which supplies Sokol crude to IOC, has not been able to secure an account in the United Arab Emirates (UAE) in order to accept payments in dirhams.

Given that not all Indian banks are being able to process payments in dollars for Russian crude, particularly in cases where it might be difficult to prove that the oil was bought at a price compliant with the G7 price cap, India’s public sector refiners are now opting to pay in UAE dirhams for such cargoes.

“The amassement of Sokol-laden tankers around India will most probably see a sudden resolution over the upcoming days. Of the six tankers that were idling around India’s coast, two have started to indicate Chinese final destinations. As the UAE banking delays of the Sakhalin-I project operator continue, effectively being unable to fully relocate the trading of Sokol cargoes into the relatively calm waters of the Dubai trading world, China might appear as the final solution for some cargoes,” Katona said.

But it might be too early to “write off” India’s appetite for the Far East Russian crude grade, Katona said, as three tankers were recently booked to transport Sokol crude, and all three “indicate India as their final destination”. As per ship tracking data, two of the tankers are expected to unload Sokol crude at the Paradip port, and one at the Vadinar port.

In the aftermath of the war in Ukraine, as Western sanctions on Russia altered global crude oil flows, India and China emerged as the biggest buyers of Russian crude, accounting for most of Moscow’s oil exports.

Prior to the war in Ukraine, Russia was a marginal player in India’s oil imports. However, as the West began shunning Russian oil following Moscow’s February 2022 invasion of Ukraine, Russia started offering deep discounts on its oil to willing buyers.

Indian refiners started lapping up the discounted barrels, catapulting Russia to the top spot on the list of India’s oil suppliers, displacing traditional heavyweights like Iraq and Saudi Arabia. India is the world’s third-largest consumer of crude oil and depends on imports to meet over 85 per cent of its requirement.