By Seher Dareen and Rahul Paswan
(Reuters) – India’s crude oil imports rose to a five-month high in December, government data showed on Monday, as refiners stocked up discounted Russian fuel amid a steady increase in consumption in the country.
Crude imports for the month were up 2.7% from November at 19.52 million tonnes, according to data from the Petroleum Planning and Analysis Cell. On a yearly basis, imports were down 0.7% in December.
Russia continued to be the top oil supplier to India in December, shipping a record 1.25 million barrels per day (bpd).
Oil product imports rose to 4.12 million tonnes in December from 3.74 million tonnes in November. Exports also rose to 5.83 million tonnes, with diesel accounting for 2.41 million tonnes.
“Russia sells its oil to other clients (primarily in Asia), while Europe/the G7 buy their crude/refined products from other countries. The re-routing of these flows has resulted in a sharp increase of oil in transit on tankers,” UBS analyst Giovanni Staunovo said.
“If the discount stays in place, I would expect India to keep buying Russian crude (and refined products) as long as it is allowed.”
The European Union has agreed a full ban of Russian oil products imports from February 2023 in an attempt to cut Russia’s revenues for its role in the military conflict with Ukraine.
“The only option for Russia is to sell its crude in Asia. As a result, buyers are dictating the price for this crude,” said Refinitiv analyst Ehsan Ul Haq.
Meanwhile, India’s fuel demand reached a nine-month high in December, helped by strong industrial activity and a rise in gasoline consumption.
India has cut its windfall tax on crude oil and exports of aviation turbine fuel (ATF) and diesel, according to a government notification dated Jan. 16.
India, Asia’s third-biggest economy, holds surplus refining capacity and exports refined fuels as well.
(Reporting by Seher Dareen and Rahul Paswan in Bengaluru; editing by Jason Neely and Krishna Chandra Eluri)
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