Page 22 - RusRPTApr24

2.7 Russian oil exports to India in trouble
Russian oil supplies to India are rapidly declining: at the beginning of the year they refused to accept premium grades Sokol and BCTO, and now they do not want to unload Sovcomflot tankers. India's largest processor Reliance refused to cooperate with the Russian shipping company. Others may follow his example.
Reliance Industries, the operator of the largest oil refinery in India and the world in Jamnagar, refused to accept Sovcomflot tankers and demanded that they not deliver new shipments. In February 2024, 14 Sovcomflot vessels came under US sanctions. According to Reuters, more and more Indian refineries are showing “extra caution” and plan to avoid Sovcomflot tankers.
After Russia's invasion of Ukraine, India became the largest consumer of Russian oil. Already in 2022, India accounted for 40% of all Urals maritime supplies. Fuel was often sold at a price higher than the price ceiling established by the G7.
The G7 countries adopted a price limit on Russian oil in December 2022; Australia, the EU and some European countries outside the European Union joined the decision. The ceiling prohibits the purchase of oil from Russia at a price above $60 per barrel, as well as the provision of insurance and transportation services.
The restriction itself did not work well. In the first year of the price ceiling, Russia earned more from oil sales than before its introduction, and the average price, according to Indian customs, was about $72 per barrel.
After tightening control over compliance with the ceiling and the threat of sanctions, India reduced purchases of Sokol and refused to buy BCTO - two premium varieties that, in the current environment, cannot cost less than the ceiling.
Reliance's refusal to cooperate with Sovcomflot could lead to an increase in freight costs and a fall in India's imports of Russian oil, writes Reuters.
According to one of the traders, more and more Sovcomflot ships are now being redirected to China. China will also increase purchases of BCTO and Sokol after India abandons these varieties. For China, Russian oil is not only cheaper than Iranian oil, but also closer - delivery takes only five to six days. In addition, payments in RMB are made directly, without the knowledge of the authorizing parties.
The second option that remains with Russia is a shadow fleet. In 2023, it ensured the transportation of 45% of its oil, including to European countries. Sanctions against its tankers have so far been sporadic. The United States began punishing ship owners for violating the price ceiling in October 2023. Six companies from Turkey, the UAE and Liberia were sanctioned.
22 RUSSIA Country Report April 2024 www.intellinews.com