Indian Oil Corp Purchases 7 Million Barrels of Crude Amid US Sanctions on Russia

India’s top refiner IndianOil Corporation (IOC) has taken advantage in its most recent move;from the spot market, it purchased some 7 million barrels of crude but already it has acquired a high profile Murban crude from Abu Dhabi. The acquisition is against the background of far-reaching U.S. sanctions in this regard that are expected to cause shortage in the supply of oil from Russia. Consequently, as the global oil market is affected by geopolitical concerns and more strict sanctions against Russia, indigenously owned refineries are progressing towards adopting Middle East and African sources of oil to fulfill their needs.

EFFECT OF U.S SANCTIONS ON RUSSIAN PETROLEUM
More recently, the United States of America unleashed awesome economic sanctions on a number of Russian oil and shipping entities, which substantially held the advantage of completely devising ultra gigantic disorder creates a havoc for the overall refined oil supply economies, and imposes a very severe effect on Russia, being one of the largest producers of oil globally. This is the limitation of a good proportion of Russian financing in its oil exports’ role today, which could imply constraint on these other related activities concerning oil and possible future financial aid against crude production and transportation.
In view of this, IOC and other major refiners across the globe are working to secure their future oil supplies. But for Indian refineries, the Arctic is the major supply line, particularly low-sulfur Arctic oil grades like Novy Port, ARCO, and Varandey, from Russia. The Indian refiners have now started turning to the Middle East and Africa to fill the gap caused by the application of U.S. sanctions against these oil supplies.
Spot Purchases of IOC, Strategic Shift
Spot purchases are when IOC steps up its spot market buying which is generally a one-time long-term contract. It purchased seven million barrels from sources including 2 million barrels of Murban crude from Totsa, the trading arm of French energy giant TotalEnergies. This will also raise interest from India since Murban is not a typical, large purchase item from India’s refiners as it is a premium crude.
The contract is based on a delivery to-customer basis, with the premium set at around $5 per barrel to the Dubai benchmark price, reflecting the growing demand for high-quality crude as it is the main replacement of refinery sources responding ag-IC market changes.
Except, besides, getting the Murban crude, IOC chartered two VLCCs, each of 1 million barrels, for Nigerian Agbami and Akpo grades. These were bought from Shell. At the same time, the same seller received 1 million barrels of Gabon’s Rabi Light. A second VLCC — comprising 1 million barrels each of Nigerian Agbami and Angola Nemba — was purchased from Chevron. What remains interesting is that the so-called IOC strategy is targeting several sources of crude, moving beyond its previous suppliers to secure a continuous feedstock supply for its refinery system.
Becoming More and More Dependent on Middle Eastern and African Crude: Indian Refiners
Curbs on Russian oil imports have spurred a rush to the Middle East and Africa by Indian refiners looking to replace lost Russian supplies. All these factors have made the spot market for crude oil more competitive, with India and China, the two biggest oil importers worldwide, tussling to be able to secure alternative sources. Such trends have led to a skyrocketing upward movement in premiums for Middle Eastern crude—spot premiums at almost the highest ever in over two years. The major pull factor here has been the strong demand witnessed in most areas with concentration on replacing Iran and Russia sanctions-hit supplies.
Indian refiners are now issuing tenders to buy crude. They also include public sector companies like IOC. Thus, it is evident that other Indian refiners will have to follow IOC’s example in order to acquire both sour and sweet crude oils for delivery between the second half of February and the first half of March. This means the crudeservicers in the market buy crude at a higher price in the spot, which may lead to higher crude and, in consequence, gasoline and diesel economics.
Interruption of Russian Crude to India
India was considerably dependent upon Russia for crude imports. Most of the offtake into India by state refiners was from the Russian oilfields. However, the recent sanction against Russian oil companies and tanker firms, announced by the USA early this year, has put German allies at the crossroads concerning their supply to Russia’s upstream, a situation labeled Russia’s one, the largest European market. The Russian oil companies face the threat of being taken to the court in absentia by the U.S. sanction. Russian crude grades with the least sulphur, including Novy Port, ARCO, and Varandey, have been imported by Indian refineries. These grades are very important for Indian refineries as these kinds of crude are easy to refine and lead to a higher yield.
Expected disruptions as a result of these sanctions would mean that global oil supply would tighten further in terms of availability, which would mean the refineries found it more difficult to source the key feedstock they process. This will mean Indian refiners are bound to think of other sources, whether they are in the Middle East or probably West Africa, or even other oil-producing regions top ensure that they sustain their own its critical operations.
Future of oil imports in India
Importance of energy security in India will grow quickly. There is a significant shift in the oil import strategy of the country as it seeks sustainable ways to manage its energy future. Recent spot purchases by IOC represent a wider trend of Indian refiners seeking crude oil from more sources.
Now, with the growing global oil market volatility on account of geopolitical risks and sanctions, India will increasingly look towards alternative regions, source crudes from places like the Middle East and Africa.
Well, the sanctions on Russia as well as the global tightening of supply chains stress the importance of energy security for India. In this regard, dependence on oil imports has made the country a vulnerable player in the event of any global disruption. The recent changes in the market have brought to light the fact that the next source of action will be a much tougher energy strategy than ever before.
Therefore, IOC’s purchase of seven million barrels is not just to counter sanctions from the United States on Russia but is also part of a more comprehensive strategy that assures security of crude oil supply in a turbulent global situation. India is going to respond well, and the refiners are going to look for traversing the storm periods and navigating new markets and strategies in the meantime while ensuring the continuation of their operations to meet a greater demand for refined products.