India is on track to import 1.8 million barrels per day (bpd) of Russian crude in May—the highest in 10 months—as its refiners aggressively stock up on ESPO Blend, a light sweet grade ideal for gasoline production. The buying spree comes just before new EU/UK sanctions target Moscow’s “shadow fleet” of tankers, locking in supplies while displacing Chinese demand and pushing ESPO premiums to $2/barrel.
Why the Surge?
🔹 Refinery Needs: Reliance Industries and MRPL are feeding fluid catalytic crackers (FCCs) during maintenance at crude distillation units.
🔹 Sanction Hedge: Indian refiners rushed to secure cargoes before June EU sanctions on Russia’s oil logistics.
🔹 China’s Retreat: State-owned Chinese refiners avoid sanctioned barrels, while independents face quota limits—freeing up ESPO for India.
Market Mechanics
- Premiums Spike: ESPO to India now trades at 0.50–0.50–1/barrel over Dubai, while China pays **2∗∗forJuly−loadingcargoes(vs.2∗∗forJuly−loadingcargoes(vs.1.50–$1.70 in June).
- Reliance’s Rosneft Deal: Long-term contracts have boosted deliveries to India’s Sikka port since January.
- Global Ripple Effect: India’s demand has tightened ESPO supplies, forcing Chinese buyers to pay up.
What’s Next?
China’s Quandary: Independents may bid harder for remaining ESPO if quotas loosen.
Sanction Watch: EU/UK measures (effective June) may disrupt shipments, but India’s pre-emptive buys cushion the blow.
Summer Demand: High refinery runs and gasoline margins could sustain India’s appetite.