INDIA DATA: Feb crude imports take a breather on high stocks, geopolitics, maintenance

India's crude oil imports took a breather in February and dropped 6.6% year on year as tensions on the Red Sea route, new sanctions on Russian oil and plentiful arrivals in January prompted refiners to adopt a cautious approach.

Petroleum Planning and Analysis Cell data showed that February imports fell to 18.02 million mt (4.5 million b/d) in February, which was about 16.8% lower than the previous month.

"Crude imports were lower in February on account of higher maintenance and possibly more import volumes spilling over from January," said Himi Srivastava, principal research analyst at S&P Global Commodity Insights.

Planned maintenance at HPCL Mumbai and BPCL Kochi refineries led to lower processing, which in turn led to lower crude imports in February. Moreover, Reliance's SEZ refinery also reported lower throughput due to the shutdown of its secondary units during the January-February period. Overall, offline capacity in February was higher year on year by almost 100,000-120,000 b/d, she added.

Some analysts attributed lower February imports to plentiful arrivals in January, the month when refiners stocked up cargoes to meet local demand as well as take advantage of rising demand for refined products in export markets.

Higher crude prices due to turbulence in the Red Sea region and fresh sanctions on Russian oil sales in the global market also made some refiners cautious while planning February import volumes, they added.

Russian flows

Russia continues to be India's primary supplier, contributing to over 35% of India's total crude imports. India's appetite for Russian crude slowed in Q4 2023 compared with the first half of 2023 but Russian imports are gaining traction in Q1 2024. S&P Global Commodity Insights expects India to import around 2 million b/d of crude oil from Russia in March.

"Indian refineries, accustomed to acquiring Sokol at a rate of 150,000-160,000 b/d, observed a notable absence of Sokol imports in recent months. This was attributed to payment issues, while numerous tanks waited for discharge for more than 10 to 15 days," said Sumit Ritolia, refinery economics analyst at S&P Global.

"The challenges associated with Sokol crude imports were connected to both Western sanctions and payment-related issues in the past month. It is important to note that the payment issue appears to be temporary and is not anticipated to impact future cargoes from Russia," he added.

India's overall crude imports rose 2.4% year on year to 233.38 million mt (4.7 million b/d) in 2023. The country imports around 85% of its crude requirements.

Fuel exports

India's exports of refined oil products rose 14.8% year on year to 5.8 million mt (1.57 million b/d) in February, PPAC data showed. Oil product exports were 20.1% higher month on month amid rising demand from overseas markets.

"The increase in oil product exports in February was mainly due to an increase in outbound shipments of aviation turbine fuel, diesel, lube oil, and fuel oil. Higher exports were led by strong product demand and better product spreads," said Sumit Pokharna, vice president at Kotak Securities Ltd.

Indian refiners shipped out 2.40 million mt, or 616,295 b/d, of gasoil in February, up 18.64% on the month and 11.53% on the year. Outflows of co-distillate jet fuel/kerosene rose 12.1% on the month and 25.35% on the year to 816,000 mt, or 222,290 b/d, PPAC data showed.

Gasoil exports were also supported by dampened domestic demand due to unfavorable weather conditions, which hampered road transport and manufacturing activities through February.

Exports of light distillates increased 20.27% on the month but fell 5.48% on the year to 1.738 million mt in February, with gasoline outflows rising 28.95% on the month, outpacing a 2.74% month-on-month increase in naphtha exports, PPAC data showed.

India's refined oil product exports rose 0.2% year on year to 62.2 million mt/year in 2023, as robust European demand helped to boost volumes.