India said to skip buying Russia's ESPO crude in September as freight costs jump

India, which rarely used to buy Russian oil, has emerged as Moscow’s biggest oil customer after China since Russia’s invasion of Ukraine in late February.

Indian refiners are set to skip purchases of Russian ESPO crude oil this month due to higher freight rates, turning to Africa and the Middle East instead, industry sources said.

India, which rarely used to buy Russian oil, has emerged as Moscow’s biggest oil customer after China since Russia’s invasion of Ukraine in late February.

Refiners in India have been snapping up almost all grades of Russian crude, taking advantage of discounts after sanctions led some entities in the West to halt purchases. However, higher prices are set to cool Indian demand, channeling supplies to China.

“On net back basis after factoring in the freight, the landed cost of ESPO is turning out to be $5-$7 a barrel costlier in comparison to similar grades from other countries such as UAE’s Murban,” said an Indian industry source familiar with the matter, adding that Russian oil had previously been cheaper.

Instead of ESPO, Indian companies are buying other grades such as those from West Africa that give better yields, he said.

The price gap between Brent and Dubai benchmarks has also narrowed.

Indian companies are buying other grades such as those from West Africa that give better yields