India resumes buying Russian Sokol oil after 2-month hiatus

NEW DELHI: India has resumed imports of Russian Sokol oil after a two-month gap with at least two refiners so far taking deliveries of the light sweet crude in February, four trade sources said and ship tracking data showed.

India's Hindustan Petroleum Corp, opens new tab has bought Sokol oil from a trader, the sources said. HPCL is likely to pay for the oil in UAE dirhams, three of them added.

Indian state refiners had to stop buying the grade last year after the government advised them against using Chinese yuan to pay for Russian oil amid strained relations between New Delhi and Beijing.

That led to more than 10 million barrels of unsold Sokol floating in seaborne storages in one of the biggest disruptions to Russian oil trade since the West imposed sanctions on Moscow over its military actions in Ukraine.

India did not receive Sokol oil in December and January, data from trade sources and the ship tracking data shows.

The vessel Seagull, carrying about 95,000 metric tons of Sokol, discharged at India's western Mumbai port on Feb. 13, the LSEG ship tracking data shows.

HPCL rarely bought Sokol in the past. It previously bought the grade for delivery at Mumbai in August, according to the LSEG data.

HPCL did not immediately respond to a request for comment.

In February, private refiner Nayara Energy, majority-owned by Russian entities including oil major Rosneft, opens new tab, also took a delivery of Sokol oil, the data shows.

LSEG data also shows that three vessels carrying Sokol oil - NS Lion, NS Antarctic and Raven - are expected to arrive at the eastern ports of Paradip and Visakhapatnam later this month.

The sources said Russia would look at selling Sokol oil through trading firms to reduce surplus floating stocks in the Pacific. Selling via a trader will help Russia get steady payments, though that will reduce discounts for the buyer, they said.

Sokol oil is exported by Sakhalin-1 LLC, a subsidiary of Russian oil giant Rosneft, which is also a seller of the grade.

Rosneft did not immediately respond to a request for comment. Indian Oil Corp, opens new tab, the country's top refiner, was one of the key buyers of Sokol oil under its annual contract with Rosneft.

It had to stop buying the grade because Sakhalin 1 LLC has been unable to open an account with a bank in the UAE to accept dirham payments.

Earlier this month, China took two cargoes of Sokol oil, LSEG and Kpler data showed and traders said. News Desk

Last year Russia was the top oil supplier to India, replacing Iraq, which is now at No. 2, with Saudi Arabia tumbling to third position.

The annual share of OPEC's oil in India's crude imports fell to its lowest level ever in 2023 while that of discounted Russian barrels surged to an all-time high. India, the world's third-biggest oil importer and consumer, has long relied on the nearby middle eastern nations for meeting most of its oil needs to cut freight costs.

Last year for the first time India imported nearly equal quantities of oil from the OPEC members as it did from non-members

The South Asian nation imported an average 4.65 million barrels per day (bpd) oil in 2023, up 2 percent from the previous year.

OPEC's share in India's crude oil diet plunged to about 49.6 percent in the first nine months of this fiscal year from April compared with 64.5 percent a year earlier/

Altered trade flows due to geopolitical tensions and costlier shipments from some traditional suppliers have expedited India's efforts to diversify its import sources and tap cheaper supplies from even far flung areas such as Russia.

Imports of Russian oil accounted for about 36 percent of India's total crude purchases in 2023 at 1.66 million bpd. In 2022, India imported an average 651,800 bpd Russian oil.

Discounted Russian oil also curtailed India's intake of Middle Eastern oil to the lowest level ever.

Russian oil became cheaper for India as western nations shunned purchases from Moscow in retaliation for its invasion of Ukraine.

However in December India's imports of Russian oil fell to the lowest in a year as some shipments were diverted after Washington tightened rules including toughened scrutiny by banks and service providers to ensure that cargoes do not breach the $60 per barrel price cap.

The South Asian nation shipped in 1.34 million bpd of Russian oil last month, a decline of about 16.3 percent from November, as some cargoes were diverted, the data showed.