Gulf-based intermediaries helping Indian refiners route Russian crude amid sanctions

UAE intermediaries routing Moscow’s oil to India: Indian state-run and private refiners continued to receive Russian crude after the 21 November US sanctions cutoff as a new slate of Gulf-based intermediaries stepped in to supply barrels at a reduced price, Business Standard reports, citing anonymous sources as well as Kpler and Vortexa data. The US has imposed sanctions on Rosneft and Lukoil to pressure Russia over the war in Ukraine.

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New traders, old volumes: Little known firms like Alghaf Marine, Redwood Global Supply, RusExport, Grewale Hub FZE, and East Implex Stream FZE appeared on bills of lading as sellers, circumventing restrictions on producers like Rosneft and Lukoil. The intermediaries, largely clustered in the UAE and outside the ambit of US sanctions, are now critical conduits for the Indo-Russian crude trade as refiners chase markdowns of up to USD 7 per barrel.

By the numbers: Rosneft accounted for 16 of 25 tracked cargoes landing after 21 November, with Reliance’s Jamnagar refinery receiving six parcels and Nayara five, according to the business daily. State-run buyers including Indian Oil, Bharat Petroleum, and ONGC took the rest via non-sanctioned intermediaries.

Reliance says that the Rosneft cargoes were booked before the US announced sanctions on 22 October, and the final cargo was loaded on 12 November to honor pre-sanction commitments, the daily adds, quoting a Reliance spokesperson.

State-owned refiners are routing Russian crude through non-sanctioned intermediaries, Kpler analyst Sumit Ritolia told the daily, adding that shipping data showed Rosneft as the seller for some of these cargoes.

January flows: While the state refiners temporarily trimmed Russian purchases amid high inventories, volumes are expected to rebound from February as Russia makes alternative arrangements to bypass sanctions, the daily adds. Russia has shipped some India-bound cargoes set to arrive in January, of which three are headed to Roseneft-backed Nayara.

Nayara is joined by state refiners Indian Oil Corporation and Bharat Petroleum, who have picked 10 cargoes of non-sanctioned Ural barrels for January, while Hindustan Petroleum is also on the lookout amid widening markdowns, Bloomberg reports. Reliance has so far steered clear of the Russian cargoes for fear of sanctions.

OUR TAKE-

With the US trade pact still a ways away, Indian state-refiners are likely to pick up more Russian barrels at reduced prices through roundabout methods to avoid sanctions in the coming months.

Lower crude prices allow the government to keep inflation in check, reduce import bills, and increase revenue collections through higher excise duties and lower subsidies. India is already facing revenue losses after rationalizing indirect taxes this September, and with the biting US tariffs putting pressure on the manufacturing and IT sectors. Indian refiners are likely to boost their strategic oil reserves in the coming weeks with cheaper barrels from Russia and Saudi Arabia after the latter slashed prices for January deliveries.