The US is among the top buyers of Indian refined petroleum products

The US emerged as a top destination for refined petroleum products from India in November, much of it processed from Russian crude oil imported at a discount. According to data from the commerce ministry, Russia exported crude oil worth $3.08 billion in November to India, making it the second-largest exporter to India after Saudi Arabia.

Meanwhile, the US imported oil products worth $588 million in November, raising imports to the highest levels this fiscal. Experts said that the imports increased amid the high demand for crude ahead of the US holiday season.

The US has imported $3.62 billion worth of petroleum products in the eight months to 30 November, a 23% increase from the previous year and the highest in the past five years. Europe’s November imports of petroleum products from India also showed significant changes, with the UK, Spain and Romania significantly reducing imports from India, while Portugal, Belgium, and Italy increased imports by 1,600, 535, and 17 times, respectively. The Netherlands, a hub for oil storage, imported 45% more petroleum products compared to October.

India’s purchases of Russian crude have soared after international prices surged since the start of the Russian invasion of Ukraine. As Russian oil is banned in the US and Europe, India is able to purchase it at a significant discount. While the imported crude is primarily used to fuel India’s economy, local refiners have also sold the refined products in foreign markets. India is a key Asian refining hub, with an installed capacity of nearly 250 million tonnes per annum across 23 refineries. In November, the Netherlands was the topmost importer of petroleum products, including jet fuel, worth $1.26 billion. The UAE was the second largest buyer of refined products from India, importing products worth $667 million in the month.

Oil imports have certainly jumped from Russia, and some part of it has been processed and sent to Europe. The Netherlands has emerged as the top importer of oil products from India. But it is worth noting that oil companies keep storing oil depending on the strategic requirement in different countries," Ajay Sahai, director general of the Federation of Indian Export Organisations (FIEO).

“Sometimes they will store it in the Netherlands; sometimes it will be Singapore. It could be for the consumption of most European countries," Sahai said. Queries sent to the oil ministry, Russian, and the US embassies remained unanswered until press time.

Experts said that both high imports of crude oil from Russia and the export of petroleum products by India would continue despite the price cap imposed by G7 and European Union. An official aware of the developments said that India has been getting cargo from Russia as the prices are largely lower than the price cap.

“India has been immune to the impact of the price cap and will continue to get oil from all possible sources, including Russia," the official said, requesting anonymity.

A cap on the price of Russian oil, meant to ensure Moscow cannot fund its invasion of Ukraine from oil proceeds, kicked in last month. India, the world’s third-largest oil importer, has, however, said it wouldn’t join the effort to cap the price of oil, currently placed at 5% below the market price.

The price cap comes at a time when Russia has emerged as one of India’s top sources of crude oil this year. Traditionally, Russia has never been a supplier of significant quantities of oil to India. However, estimates suggest India’s appetite for Russian crude has risen to unprecedented levels, surpassing volumes from most West Asian suppliers.