In order to make up for the declining supply from Russia, Indian state-owned oil refineries are increasingly using crude from the Middle East. This change coincides with refiners reporting severe shortages in Russian crude supply; estimates suggest that 8–10 million barrels are needed for January loading, which they are unable to supply on the spot market because of a decline in Russian exports and an increase in internal demand within Russia.
At least six million barrels of Russian Urals crude have not been delivered for January as a result of the difficulties faced by Indian Oil Corporation, Bharat Petroleum, and Hindustan Petroleum in obtaining sufficient quantities. Long-term agreements that private refiners like Reliance Industries have made with Russian suppliers have made this issue worse by restricting the supply of spot cargoes for state-owned enterprises.
Indian refiners are thinking about obtaining more crude from Middle Eastern suppliers as a result of the supply problems. In November, the percentage of Middle Eastern oil that India buys hit a nine-month high, making up about 48% of all crude imports. This change is anticipated to help high-sulfur oil prices, but because it is more expensive than Russian grades, it may also have an effect on profit margins.
Russian suppliers are choosing long-term contracts over spot sales, which is changing the dynamics of the crude oil market. Indian refiners are now more actively looking into alternate suppliers as a result of this shift, especially as OPEC agreements and growing domestic demand in Russia may further limit available volumes.
Indian refiners, which have profited from cheaper Russian oil since the start of the conflict in Ukraine, may see greater operating costs as a result of the switch to Middle Eastern petroleum. Since India depends mostly on imported oil to meet its energy demands, the possible rise in crude prices could have an impact on overall energy expenditures. Furthermore, India continues to be a vital market for both Russian and Middle Eastern crude exporters since it manages these supply issues without sanctions on Russian oil.
