India Remains Top Destination for Russia’s Urals Oil Exports, China’s Demand Slows

India continues to be the primary market for Russia’s seaborne Urals oil, with approximately 70% of exports heading to the country, according to Reuters monitoring and industry sources.

Attractive prices for Urals oil result in good margins for Indian refiners, and term contracts and lower freight rates between Russian and Indian companies are also supporting elevated supplies, as reported by Reuters on Monday.

Last month, Russia’s Rosneft and Indian Oil Corp (IOC) announced a supply deal for up to 1.5 million tons of Russian oil (11 million barrels) per month, effective from April 1.

Traders noted that Chinese refineries were requesting late April-early May loading cargoes.

Approximately 280,000 tons of Urals will be sent to China from the Al-Hoceima ship-to-ship (STS) facility off the coast of Morocco, where the oil was supplied in March.

“China is buying Urals, but not as actively as expected,” said a trade source involved in Russian oil trading.

“Refiners in other Asia-Pacific countries are also interested, but many are still afraid of sanctions, so marketing is slow,” they added.

Urals deliveries to STS facilities in the Mediterranean continue to decline, with no cargoes shipped so far in April.

In 2018, Indian oil companies signed an agreement to purchase up to 9 million barrels of oil from Russia’s Rosneft as part of a larger deal worth over $5 billion,

which also included joint development of oil and gas fields in Russia and India.

In 2019, Indian oil company Nayara Energy (formerly known as Essar Oil) signed a deal with Rosneft to increase its crude oil supplies from Russia, reportedly costing $4 billion.

In 2020, India and Russia signed a memorandum of understanding (MoU) to work together in developing India’s strategic petroleum reserves.

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