India set to skip buying Russia's ESPO crude in September as freight costs jump
India Today
India has emerged as Moscow's second-biggest oil customer after China since Moscow's invasion of Ukraine.
Indian refiners are set to skip purchases of Russia ESPO crude oil this month due to higher freight rates, turning to Africa and the Middle East instead, industry sources said.
India, which rarely used to buy Russian oil, has emerged as Moscow's second-biggest oil customer after China since Moscow's invasion of Ukraine in late February.
Refiners in India have been snapping up nearly all grades of Russian crude, taking advantage of discounts after some entities in the West halted purchases.
However, higher prices are set to cool off Indian demand, channelling supplies to China.
"On netback basis, after factoring in the freight, the landed cost of ESPO is turning out to be $5-$7 a barrel costlier in comparison to similar grades from other countries such as UAE's Murban," said an Indian industry source familiar with the matter, adding that Russian oil has previously been cheaper.
Instead of ESPO, Indian companies are buying other grades such as those from West Africa that give better yields, he said.
The price gap between Brent and Dubai benchmarks has also narrowed, opening the arbitrage window for Atlantic Basin grades to Asia.
