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The Red Sea attacks appear to be hurting traders and suppliers across the globe — but Russia’s oil trade with India is still booming

In Europe
January 11, 2024
  • Russian oil cargoes are still sailing via the Red Sea to get to India, according to S&P Global.

  • Iran-backed Houthi rebels have been attacking commercial ships in the Red Sea since November.

  • Many commercial shipping lines and vessels have rerouted from the Red Sea to avoid getting caught in the attacks.

Attacks by Houthi rebels on commercial ships in the Red Sea are disrupting global trade, with many vessels changing up their shipping routes to avoid risk.

Major shipping lines including Maersk and Hapag-Lloyd are avoiding sailing through the Red Sea — a key route between Asia and Europe. The move is increasing transit times and driving up ocean freight rates.

However, Russia’s trade with India appears to be an exception. There appear to be no diversions of Russian vessels carrying crude oil bound for India that are traveling through the Red Sea, S&P Global reported on Monday.

“India’s demand for Russian crude remains resilient despite Red Sea threats, with no known diversions seen so far,” said Sumit Ritolia, a refinery economics analyst at S&P Global.

Russian oil cargoes typically sail through the Red Sea before reaching India. This currently remains the preferred route, according to S&P Global’s commodity trade intelligence service.

In contrast, recent data suggests that European oil consumers are avoiding the Red Sea by purchasing from the US instead of the Middle East.

At least 44 million barrels of Russian oil were headed to India as of Monday and so far, there have been no trade diversions, according to S&P Global.

It’s not immediately clear why ships carrying Russian oil to India haven’t rerouted to avoid potential attacks in the Red Sea. However, oil tankers were still sailing through the Red Sea last month to avoid the higher costs of sailing around Cape of Good Hope in South Africa, Reuters reported on Monday.

India has become a major energy customer of Russia’s after the West imposed sweeping sanctions on Moscow over its invasion of Ukraine in February 2022.

Alexander Novak, Russia’s deputy prime minister, said in an interview last month that India’s share of Russian oil exports had grown from virtually nothing before the war — replacing its previous major market in Europe.

Russia accounted for 35% of India’s crude oil imports in 2023, according to data from S&P Global. Russian oil exports are attractive as they are cheaper than competing international grades — on January 5, Russian oil was $17.5 a barrel cheaper than Dated Brent, per S&P Global’s Platts commodity service.

Hardeep Singh Puri, India’s petroleum and natural gas minister, said recently that the country is monitoring the situation in the Red Sea.

Read the original article on Business Insider

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