India Explores Alternatives as Crude Imports from Brazil Decline Amid Russian Dominance

Key Takeaways:

• Crude Oil Prices Rise: Brent and WTI crude futures increased by 0.2% and 0.33%, respectively.
• India’s Oil Imports: Russia dominates India’s crude imports, providing 42% of the total.
• Global Outlook: IEA and OPEC have revised their demand forecasts downward due to weaker demand from China.
• US Supply: US crude inventories fell by 2.2 million barrels, with gasoline stockpiles also dropping.

Crude Oil Price Update

• Crude oil futures traded higher on Friday morning after official data showed a decrease in inventories in the US.
• December Brent oil futures were at $74.60, up by 0.20 percent, and November crude oil futures on WTI (West Texas Intermediate) were at $70.90, up by 0.33 percent.
• October crude oil futures were trading at ₹5957 on Multi Commodity Exchange (MCX) during the initial hour of trading on Friday against the previous close of ₹5897, up by 1.02 percent, and November futures were trading at ₹5935 against the previous close of ₹5877, up by 0.99 percent.

India’s Oil Import and Global Demand Trends

• India’s crude oil imports from Brazil have been inconsistent in 2024, with imports only occurring in five months.
• Peak imports were recorded at 41,600 barrels per day (b/d) in April 2024, a significant decline from December 2023 levels of 143,000 b/d.
• Russia remains India’s largest crude supplier, accounting for 42% (1.7 million b/d) of imports from January to September 2024.
• Iraq (940,000 b/d) and Saudi Arabia (623,000 b/d) are India’s other key suppliers, with the US and UAE also contributing.
• According to the US EIA (Energy Information Administration), US commercial crude oil inventories decreased by 2.2 million barrels for the week ending October 11. At 420.5 million barrels, US crude oil inventories were about 5 percent below the five-year average for this time of year.
• Total motor gasoline inventories decreased by 2.2 million barrels from last week and were about 4 percent below the five-year average for this time of year.
• Total products supplied in the US over the last four-week period averaged 20.8 million barrels a day, up by 2.8 percent from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 9 million barrels a day, up by 5.4 percent from the same period last year.

Petroleum News

• The International Energy Agency (IEA) recently lowered its demand forecasts, citing weaker demand from China and signaling the potential for a global oil glut.
• Similarly, OPEC cut its demand projections for the third consecutive month, further emphasizing the slowdown in China’s economy.
• Data from the Joint Organizations Data Initiative (JODI) showed on Thursday that Saudi Arabia's crude oil exports in August fell to their lowest level in a year.
• The country's oil exports stood at 5.671 million barrels per day (bpd) in August, their lowest level since August 2023. Saudi Arabia is the world's largest crude exporter.
• Indian Petroleum Minister Hardeep Singh Puri recently visited Brazil to explore increasing crude oil imports and discuss collaboration in offshore deepwater exploration and production projects.
• ONGC and BPCL hold stakes in Brazil's offshore energy blocks, and production from these investments is expected to rise from 8,000 barrels of oil equivalent per day (boe/d) in 2023 to 40,000 boe/d by 2028 with the addition of new projects like SEAP 1 and Wahoo.

Expert Opinion on Oil Market

• India's increased focus on Brazilian crude aims to diversify its oil sources amidst Middle Eastern tensions. Despite efforts, the dominance of heavily discounted Russian Urals crude and logistical constraints pose significant challenges to scaling up imports from Brazil.
• Experts believe that India’s dependence on Russia and the Middle East will continue in the near term, complicating the diversification strategy. Market participants will be watching how India navigates geopolitical risks and logistical barriers to enhance its crude imports from Brazil.