Russian warships entered the Red Sea for the first time since the Ukrainian crisis broke out, sparking talk that the Vladimir Putin regime was looking to protect tankers shipping cheap crude oil to countries such as India even as the benchmark Brent crude started to near $90 a barrel.

Analysts said the demand for Russian crude is likely to rebound among Indian refiners, with the surge in Brent prices.

“Exports of Russian crude to India have decreased in the past few months. However we expect a rebound as India’s refinery runs jump and Russian crude remains the cheapest option for Indian refiners considering its discount,” Homayoun Falakshahi, a senior crude oil analyst at Kpler, a leading provider of data and analytics in commodity markets, said.

According to a report from energy cargo tracker Vortexa, China has overtaken India as the primary importer of Russian crude oil on sea routes.

In March, China imported 1.82 million barrels per day (bpd) of Russian crude by sea, surpassing India’s 1.36 million bpd. Additionally, China also receives Russian oil through pipelines.

India had been the leading importer of seaborne Russian crude for around eighteen months. India’s recent slowdown in Russian crude imports is attributed to various sanctions and rising prices.

China’s February imports of 1.3 million bpd marginally exceeded India’s imports of 1.27 million bpd, with the gap widening significantly in March, Vortexa said.

Despite the shift, India’s imports of Russian oil increased 7 per cent month-on-month in March, indicating a growing inclination towards acquiring discounted barrels.

Besides, the US has not asked India to cut Russian imports. An American treasury officials said the West set the cap of $ 60 per barrel for Russian crude to ensure supplies remained stable while hitting Moscow’s revenue.

“It is important to us to keep the oil supply on the market. But what we want to do is limit Putin’s profit from it,” Eric van Nostrand, the US treasury’s assistant secretary for economic policy, said.

Safe passage

Homayoun said “Russian cargoes are not threatened by Houthis so all of them heading east from Russia’s western ports (85 per cent of them) are still flowing via the Red Sea.

“Many of them do end up in Indian ports, the main ones being Sikka, Vadinar, Cochin, Paradip, Mundra, Mangalore etc. However, with the US tightening sanctions on Sovcomflot, we are increasingly seeing ship-to-ship operations near the coast of Oman so that Indian buyers aren’t involved in buying cargoes transported by Sovcomflot.”

“For Indian buyers, it doesn’t make much of a difference because they buy Russian on a DES basis, ie they only pay at delivery, so it is more of a headache for charterers of Russian crude, which are mostly Russian shell companies based out of Dubai or Hong Kong,” he added.

The Red Sea is crowded with ships from Western Navies which are looking to protect commercial ships from Houthi attacks.