Why Russian oil shipments to India are set to plunge in Dec and what's next

Russian crude oil flows to India this month are on track to hit the lowest level in three years, though volumes may rise early next year after Reliance Industries Ltd. resumed purchases.

Deliveries are expected to be about 1.1 million barrels a day in December, the lowest since November 2022, according to analytics firm Kpler, which tracks shipping data. Still, that’s higher than a forecast made by Indian officials earlier this month after the latest US clampdown on Russian energy.

India’s demand for Russian crude dipped in recent months as buyers grappled with heightened US scrutiny of the trade. Shipments fell in July before inching higher as some refiners, including state-owned Indian Oil Corp. and Bharat Petroleum Corp., reverted to purchasing the cut-price barrels.

Reliance, India’s largest private refiner, paused Russian oil purchases after the US sanctioned Rosneft PJSC and Lukoil PJSC in late October, giving importers a month to wind down transactions with the two producers. The major processor has now started sourcing barrels from non-blacklisted suppliers.

The Russian crude is being used at Reliance’s Jamnagar refinery in Gujarat that produces fuels for the domestic market, rather than for export.

Overall Russian oil deliveries to India had slowed to as little as 712,000 barrels a day in the second week of December, before rising, according to Kpler, which estimates imports at 1.8 million barrels in November. The Indian officials had predicted daily flows this month would be 800,000 barrels.

The decline in December imports follows the pause by Reliance — previously the biggest buyer — while Kpler figures show lower flows to the HPCL-Mittal Energy Ltd. Mundra oil terminal, and Mangalore Refinery and Petrochemicals Ltd. taking no barrels this month for the first time since September 2022.

Reliance, HMEL and MRPL didn’t immediately respond to a request for comment.

India’s imports of Russian crude may also get a boost from Nayara Energy Ltd., a company backed by Rosneft and sanctioned by Europe. The processor plans to postpone planned maintenance at its Vadinar refinery, which was originally set for early next year, potentially supporting higher Russian oil purchases.