China is buying more Russian oil to replace missing Iranian barrels. The problem for India is that some of those Russian barrels used to be its barrels.
China’s seaborne imports of Russian crude are estimated at 1.25 million barrels per day in August, according to Kpler data, cited by Reuters. That is down from 1.423 million bpd in July, but July and August are still China’s strongest months for Russian seaborne crude since April.
The shift comes as Chinese imports of Iranian oil remain crushed by the Middle East war and U.S. blockade. China is expected to receive just 340,000 bpd from Iran this month, roughly one-third of the 1.14 million bpd it imported in March.
China normally buys Russian ESPO crude from eastern ports. Now it is reaching farther west.
Russian crude loaded from European ports is expected to account for 31% of China’s seaborne Russian imports in August, up from 22% in June.
That puts China squarely into India’s favorite shopping aisle.
India traditionally takes the bulk of its Russian crude from those western ports. Its Russian imports are now estimated at 1.87 million bpd in August, down sharply from a record 2.79 million bpd in July and 2.73 million bpd in June.
Imports specifically from Russia’s European ports are expected to fall about 770,000 bpd, or nearly 30%, this month.
India’s total crude imports are consequently estimated at just 4.17 million bpd in August, the lowest since the Iran war began and down from 5.06 million bpd in July. Kpler may revise that figure higher as additional cargoes are identified.
The bigger problem could arrive next month.
India is a major exporter of diesel and gasoline into an Asian product market already short of both. August exports of light and middle distillates are holding at 1.29 million bpd.
But crude arriving today becomes fuel tomorrow. If India cannot replace the Russian barrels now being diverted toward China, September fuel exports could be the next thing to shrink.
By Julianne Geiger for Oilprice.com
