India's Russian Oil Imports Reach 10-Month Peak Driven by ESPO Crude Demand

India’s imports of Russian crude oil are projected to reach around 1.8 million barrels per day (bpd) in May, marking the highest level in the past 10 months. This spike is largely attributed to a significant rise in demand for lighter grades like the ESPO Blend, sourced from Russia’s Far East port of Kozmino. 

Indian refiners have shown strong interest, securing over 10 cargoes for June loading. This trend is likely to continue into July, with the increased availability of ESPO crude in the market and favourable refining margins encouraging purchases.

ESPO stands for East Siberia Pacific Ocean crude oil. It’s a type of light, sweet crude oil produced in Russia’s East Siberia region and exported mainly through the Pacific port of Kozmino. ESPO crude is prized for its lower sulfur content and lighter properties, making it easier and cheaper to refine compared to heavier, sour crude oils.

Market Dynamics and Pricing Trends

Due to sanctions and limited import quotas, Chinese refiners have scaled back purchases, prompting more ESPO cargoes to be directed to Indian buyers. Consequently, spot premiums for ESPO crude delivered to India have increased, now ranging between 50 cents and $1 per barrel over Dubai benchmark prices.

This surge in Indian demand has also influenced the Chinese market, where July-loading cargoes are now offered at around $2 per barrel above Dubai prices, up from $1.50-$1.70 for June.

Refinery Maintenance and Long-term Supply Arrangements

Maintenance activities at key Indian refineries such as Reliance Industries and Mangalore Refinery and Petrochemicals have increased demand for feedstock that suits fluid catalytic cracking processes. According to a news report, some of the ESPO crude deliveries are part of a long-term supply agreement between Reliance and Russian oil giant Rosneft. Deliveries to Reliance’s Sikka port on the western coast have seen a marked increase since the beginning of the year, further supporting the upward trend in import volumes.

Read More: India’s Edible Oil Imports Hit 4-Year Low in February.

Conclusion 

India's rising imports of Russian ESPO crude reflect strategic buying amid favourable margins, refinery maintenance, and reduced competition from Chinese refiners.

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