Indian Oil Corp, the state major, is buying Middle Eastern and African crude to replace Russian volumes affected by U.S. sanctions, including a cargo of Abu Dhabi Murban crude, which IOC does not normally buy, Reuters has reported, citing trading sources.
The Murban cargo fetched a premium of $5 per barrel above the Dubai benchmark, the sources told Reuters.
In addition to the rare Murban cargo, which totaled 2 million barrels, Indian Oil Corp. also bought 3 million barrels of Nigerian crude, a million barrels of Gabonese crude, and a cargo of Angolan crude in the past few days.
The outgoing U.S. administration last Friday slapped the most severe sanctions on Russia’s oil yet, designating two major Russian oil companies, Gazprom Neft and Surgutneftegas, as well as 183 vessels, dozens of oil traders, oilfield service providers, insurance companies, and energy officials.
The sanctions on the oil companies are the first direct designations against Gazprom Neft and Surgutneftegas, which were sanctioned by the UK on the same day, too, as “the profits from these 2 companies are lining Putin’s war chest and facilitating the war,” as the UK government said.
The latest sanctions also cut off Russia’s access to U.S. services related to the extraction and production of crude oil and other petroleum products.
According to analysts, the sanction package could reduce the supply of Russian oil globally by between 700,000 and 800,000 barrels daily—a volume sufficient to keep the benchmarks higher.
As a result, Russia’s biggest clients in Asia are in a rush to secure the volumes they need, and they are driving a higher premium for these barrels. Earlier this week, Reuters again reported Indian Oil Corp. had organized its first sour crude import tender in three years, seeking high-sulfur crude from spot market suppliers. The company has also organized a tender for sweet crude, to be delivered between mid-February and mid-March.