A Dynamic India (GDP growth of 4.5-6% in 2023) has been gaining in global energy markets as a result of sanctions placed on Russia. EkaLore has previously written about gains from prior Indian investments in the infrastructure and capabilities for handling oil impacting domestic and global markets.
The economy of India is seeing gains as increases in fuel costs are restrained by access to low-cost Russian crude and products. These gains may be temporary (due to the global sanctions on Russian exports). A Dynamic India has the opportunity to invest and improve fuel and energy markets while seeing temporary shelter from global fluctuations in oil-based energy pricing. GDP Growth is helped by increased Indian oil product exports and higher economies of scale from the large investments in oil processing infrastructure in the last decade and more.
India is not participating in the EU/UK/USA sanctions on Russian crude oil and oil products. This government policy choice has made India, along with China, a destination for Russian crude oil and some oil products with some nuances of sweet and sour crudes. Sales of processed oil products have increased to the EU and USA. The sales of processed fuels and VGO (vacuum gas oil) products (diesel and gasoline components) have increased (up to 300000 bpd or more). Competitive refining capacity around the Atlantic basin has switched to higher cost sources of crude. Saudi Arabia is purchasing low-cost high-sulfur Russian-crude supplies (up to 193000 bpd in June 2023) to produce fuel-oils while still being the largest exporter for OPEC+. Saudi Arabia uses Russian-crude and products for its domestic use while shipping local production to global markets.
Oil, and component, purchases by India have jumped from less than 2% in 2021 to more than 20% across Indian purchasers. For Indian Oil Corporation the jump is from 0.1% to more than 21%. ONGC may get more than 30% of its imported feedstocks from Russia. Most of the replacement volume has come at the expense of Middle Eastern producers and intermediaries. 45% of all Indian imported crude feedstocks are now Russian. Indian Oil Corporation, ONGC, and Reliance have all benefited from the low feedstocks and high value outputs. The largest importers are Nayara Energy and Reliance.
The scale of the imports can be seen by the approximately 15M barrels of oil waiting for unloading from 14-20 ships in the middle of June due to weather and port delays in India. Many of the same ships will be used to transship finished outputs to other markets. The IEA has stated Indian (2M bpd) and Chinese (2.2M bpd) imports now total more than 80% (was 70% in February 2023) of all Russia exports. These import rates are being sustained, or growing, over months. Prior to February 2022 only 34% of Russian sea-borne exports went to Asia compared with 90% in May 2023. The key bottleneck is Russian-accessible oil-product bulk carriers due to sanctions limitations. Chinese and other financial institutions, not under restrictions, have stepped into global requirements covering shipping and logistics operations related to Russian exports.
See EkaLore's analysis and notes on a Dynamic India and more at http://www.ekalore.com
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