In August, Russia’s seaborne crude exports saw a slight increase to 3.40 million barrels per day, though this was still below the levels observed earlier in the year. This marginal rise concealed a significant shift in trade patterns. Shipments to India, which had been a major buyer, dropped by 21% to their lowest level since January, falling to 1.30 million barrels per day. At the same time, China’s imports of Russian crude rose by 12% to a new annual high of 1.11 million barrels per day. According to Xclusiv Shipbrokers, India and China continue to be central to Russia’s seaborne trade, together absorbing over 70% of the total volume.
Drivers of India’s Import Decline
India’s sharp reduction in Russian crude imports coincided with the United States’ announcement of a 25% “secondary tariff” on Russian crude imports. This presents a complex choice for India: while discounted Russian barrels benefit its refiners, the country’s valuable exports to the United States are far more significant than the savings from cheap crude. This geopolitical and economic pressure may lead Indian refiners to diversify their supply, potentially moving toward Middle Eastern or West African crude grades. To maintain its market share, Russia may be forced to offer even deeper price discounts on its Urals crude, which has already seen its discount to dated Brent widen to more than $11.50 per barrel.
Impact on the Shipping Market
The change in trade routes has a mixed impact on the shipping market. The reduced flow of crude to India shortens the average voyage distance, which could lower tonne-mile demand. Conversely, the increase in Russian crude moving to Europe and Africa, albeit from a low base, creates new tonne-mile opportunities. The rerouting of shipments to smaller, more fragmented buyers could also tighten the available fleet, which could be positive for the shipping market by increasing the number of individual liftings. This situation, combined with uncertainty around future OPEC+ production policy and a potential fourth-quarter supply glut, creates a complex environment of both risk and opportunity for shipowners.
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Source: Safety4sea
