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Due to the high freight rate, India has started importing more crude oil from the Middle East and African Countries. The Indian refiners had planned to forego imports of Russian ESPO crude oil this month. Since Moscow’s invasion of Ukraine in late February, India, which in the past rarely purchased Russian oil, has surpassed China as Moscow’s second-largest oil consumer.

High costs, however, are expected to stifle Indian demand and divert supplies to china. In comparison to equivalent grades from other nations, including UAE’s Murban, the landed cost of ESPO is turning out to be USD 5-USD 7 per barrel more expensive on a netback basis after accounting for freight.

As per market experts, Indian Businesses are switching from ESPO to other grades that produce higher yields. Additionally, the price differential between the Brent and Dubai benchmarks has decreased, widening the opportunity for trading Atlantic Basin grades to Asia. The amount of Russian oil that India purchases each month have decreased since it peaked in June 2022.

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Around 2 million tonnes (14.35 million barrels) of Russian oil, including 585,090 tonnes of ESPO crude, has been loaded for India so far this month. The report revealed that compared to 1.16 million tonnes in August 2022, India had loaded 2.35 million tonnes of African oil this month.

Due to unplanned maintenance shutdowns of units at some refineries run by businesses including Indian Oil Corp, Reliance Industries, Bharat Petroleum, and Nayara Energy, India is expected to import less crude oil overall in September 2022.

According to market experts, Middle Eastern producers also reduced their official selling prices for their supplies in October 2022, impacting the demand for Russian oil.

Middle Eastern crude arrives in a week, whereas deliveries from Russia to India take around a month. The Russian ESPO shipments in September 2022 decreased to 720,000 barrels per day (bd) from over 800,000 BPD in July 2022 and August 2022.

For China, the trip to ESPO from the far East is short-haul, and freight costs have increased as well. China is therefore importing more oil from the Far East and less from ports along the Baltic or Black seas.

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As per Procurement Resource, India has started importing more crude oil from countries in the Middle East and Africa because of the high freight costs. The Indian refiners intended to skip this month's importation of Russian ESPO crude oil.

Since the beginning of this month, India has received almost 2 million tonnes (14.35 million barrels) of Russian oil, including 585,090 tonnes of ESPO crude. According to the data, 2.35 million tonnes of African oil were brought into India this month as opposed to 1.16 million tonnes in August 2022.