India has emerged as a key supplier of refined products to Europe and North America, a role that has only increased since the start of the Russia-Ukraine conflict. As we approach the end of 2023, we provide an update on India’s crude and residual fuel imports and its refined product exports, which have been pivoting away from Europe recently. We will also look at the key factors driving these flows and what to expect going forward.
Crude imports from Middle East push out Russian barrels
Indian crude imports continued to increase m-o-m in November and preliminary data for December also suggests the same. Key factors supporting this flow are the end of turnarounds by Indian refiners and a Diwali festive season in November which drives the domestic product demand higher. Crude imports for December (days 1-10) stand at 4.6mbd while residual fuel imports for the same period have come in at 240kbd according to Vortexa data. Preliminary data suggests, crude imports from the Middle East increased 14% m-o-m in December (days 1-10) while imports from Russia decreased 13% m-o-m over the same period. Another important development is the import of Venezuelan crude post temporary lifting of sanctions, a possibility which we had suggested in our Americas Market Spotlight report a few weeks back. We have since then identified four VLCCs – GUSTAVIA S, DESIMI, C. EARNEST and OLYMPIC TROPHY which are laden and on their way to India or will be loading in December.
Product exports rebound post domestic festive season demand
Moving on to product flows, India’s exports rebounded from low levels seen in October to 1.1mbd in November and 1mbd in December (days 1-10). November festive season in the country keeps products within the country following a seasonal trend. According to data from the oil ministry, November festive demand also led to a 12pc increase in Jet Fuel consumption y-o-y amid increased economic activity and higher air travel. Preliminary data for December (days 1-10) suggests diesel, gasoline and jet/kero exports at 500kbd, 400kbd and 100kbd respectively. Previously, most of the middle distillate flows mainly went to Europe while winter specifications have now meant that those flows pivot towards Asian markets with exports to Europe decreasing by 30% m-o-m in December (days 1-10).
Going forward, we expect product exports to continue to increase in Q1 2024 and subsequently driving the increase in crude imports. We shall also be on the lookout for additional flows of Venezuelan crude and how it impacts imports of Canadian, Mexican and even Russian crude arriving in India.