Russian oil import at 8-month low in October as discount falls, OPEC share up

Context:  According to an analysis of India’s official trade data by The Indian Express, Russia’s share in India’s oil imports (by volume) in October was 31.9 per cent, down from 34.8 per cent in September.

News:

• Russian Share Decline: Russia's share in India's oil imports dropped to 31.9% in October, an eight-month low.This decline continued for four consecutive months from the peak of 44.7% in June.
• West Asian Suppliers' Recovery: Iraq, Saudi Arabia, and the UAE collectively achieved a seven-month high share of 44.1% in October. Their combined share increased consistently month-over-month since June.
• OPEC's Overall Share: OPEC's share in India's oil imports reached 50.2% in October, up from 49.1% in September. OPEC's share had dropped to 71.3% in April 2022 but has been recovering, led by Iraq, Saudi Arabia, and the UAE.
• Discounts and Price Trends: Discounts on Russian oil declined due to factors such as oil price volatility, shipping charges, and competition from Chinese refiners.The discount on Russian crude, compared to Iraq, Saudi Arabia, and the UAE, was 5.7% in October.Discounts on Russian oil with respect to the average price of all OPEC suppliers fell to 6.9% in October.
• Factors Affecting Russian Oil Discounts: Factors include high oil price volatility, shipping and insurance charges, competition from Chinese refiners, export cuts by Russia, domestic demand, and bypassing restrictions.
• Importance of Discounts for India:

• Even as discounts on Russian oil have shrunk, they remain crucial for India, which relies on imports for over 85% of its oil needs.Lower concessions help India save billions of dollars in foreign exchange.
• Indian refiners saved approximately $3.3 billion in H1 FY24 through the purchase of discounted Russian crude.Savings are estimated to have risen to $3.55 billion for April-November.
• Opaque Pricing of Russian Crude: Discounts on Russian oil remain unclear due to opaque pricing, with Russian crude bought on a delivered basis. Indian refiners compare the average landed price of Russian crude with the average price of oil from other suppliers as a marker for discounts.