According to analysts speaking to CNBC, India’s ability to acquire more Russian oil may have reached a ceiling for the remainder of the year due to infrastructure and political limitations as well as restrictions on Russian oil flows.
According to Janiv Shah, senior analyst at Rystad Energy, “India will look to continue importing Russian crude, but perhaps it has reached its limit, hampering any additional barrels.”
India’s refiners have been snatching up inexpensive Russian oil ever since the Kremlin invaded Ukraine in February of last year.
Since then, Moscow has advanced to take the lead as India’s top crude oil supplier, providing approximately 40% of the country’s crude imports. According to data from the commodity intelligence company Kpler, India’s imports of Russian oil rose for the tenth straight month over month.
It was “an unprecedented feat in recent history, especially given the volumes in question — 2.2 million barrels per day in June,” according to Viktor Katona, head crude analyst at Kpler.
And based on his projections, that is the maximum amount of Russian oil that India can import for the remainder of the year.
“I estimate that this year’s peak will be 2.2 million b/d. We predict that the daily imports of Russian crude into India would slightly decline to two million barrels. That will be the amount of purchasing that can be sustained,” he said.
But according to Rystad Energy’s Shah, the amount of crude oil consumed and processed by India’s refineries has already reached a “seasonal peak” and will only trend downward from here.
Katona, which emphasized that in addition to refineries now being closed, demand for oil is anticipated to trickle down as well, echoed his comments.
“This year, certain Indian refiners will undergo maintenance for the first time; this simply wasn’t the case from January to May 2023, when there were zero turnarounds. Everyone was operating at full capacity, according to Katona.
The monsoon season in India began in early June, and because of less construction and movement throughout the summer, Katona continued, the summer season is frequently correlated with lower demand for oil goods.
In India, the third-largest oil user in the world, demand for fuel typically declines during the monsoon season, which lasts four months. According to information from India’s Petroleum Planning and Analysis Cell, the country’s overall oil demand fell 3.7% month over month in June to 19.31 million tonnes.
Russian oil flows have a “finite limit”? And it appears that there is no upper limit.
Russia’s exports have a “finite limit,” according to Daniel Hynes, senior commodity strategist at ANZ.
“I assume that any fresh supply from Russia that flows into Asia is finished. It has reached its limit today,” he continued.
According to a new study by the International Energy Agency, Russian oil shipments decreased by 600,000 barrels per day to 7.3 million barrels per day in June, which is the lowest level since March 2021.
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