Indian Refiners Shift to Middle Eastern Crude Amid U.S. Sanctions on Russia

Indian refiners are ramping up purchases of Middle Eastern crude from spot markets after the U.S. imposed sweeping sanctions on Russian producers and tankers last Friday. The sanctions disrupted supply from the world’s second-largest oil producer, tightening ship availability and pushing Indian Oil Corporation Ltd (IOC) to act swiftly.

IOC, the country’s top refiner, has acquired 7 million barrels of Middle Eastern and African crude through tenders, including a rare purchase of Abu Dhabi’s Murban crude. Trade sources confirmed that Totsa, the trading arm of TotalEnergies, sold the 2-million-barrel Murban cargo to IOC.

The organiztion secured a very large crude carrier (VLCC) carrying 1 million barrels each of Nigeria's Agbami and Akpo crude and Gabon’s Rabi Light from Shell. Another VLCC with 1 million barrels each of Agbami and Angola’s Nemba crude was purchased from Chevron.

These transactions were reportedly concluded on a delivered basis, although pricing details were not immediately available. It is noteworthy that companies typically refrain from commenting on commercial deals.

Earlier this week, IOC floated tenders seeking sour and sweet crude for loading between late February and early March, signaling ongoing efforts to secure alternative supplies.

Spot premiums for Middle Eastern crude reached a two-year high on Thursday, driven by strong demand from top importers India and China. This surge reflects a global shift as buyers replace supplies affected by sanctions on Russia and Iran.

This strategic pivot underscores the resilience of Indian refiners in navigating supply disruptions and ensuring energy security amidst evolving geopolitical tensions.