THE volume of crude oil purchases from Russia by India and China may increase, according to a Gibson Shipbrokers report.

It said that while Western sanctions against Russian crude and oil products exports continue to grow, Russia may still find alternative markets, such as India and China.

“We have seen some indications that India is willing to continue to trade. Reports have emerged that India’s central bank is in consultations on a rupee-rouble trade arrangement,” the report said, noting that Indian interest in Russian crude has also been apparent in the spot tanker market, with a number of crude cargoes fixed out of the Black Sea in recent weeks.

“Potentially, there is scope for purchases to increase, without being forced to cut trade elsewhere, as Indian oil demand is anticipated to increase by 300,000 barrels per day this year.”

Indian’s ultimate decision over this issue hinges on whether it is willing to withstand pressures from Western countries to reduce its energy ties with Russia, it said.

Gibson Shipbrokers said there is yet no evidence of any slowing of Chinese demand for Russian oil, a substantial volume of which comes from Russia’s Pacific port of Kozmino.

Citing commodity markets analytics provider Kpler, it said there is potential for China to augment purchases if there is less interest from other regional buyers, with crude exports from Kozmino to Japan and South Korea accounting for 85,000 bpd last year and shipments from De Kastri and Prigorodnoye to the US, South Korea and Japan averaging nearly 200,000 bpd.

“There has been no official indication from China that it is willing to substantially increase its crude purchases from Russia.”

But if this increase materialises, the geographical proximity of the Russian Far Eastern ports means that any increase in China’s crude intake from Russia is likely to focus first on shorthaul routes in Asia, which alone could potentially account for 300,000 to 400,000 bpd, it said.

China’s decision on to expand its crude purchases from Russia will depend much on its oil demand growth and its willingness to reduce its purchases elsewhere to accommodate additional Russian crude, the analyst said.

It said China’s total seaborne crude imports so far this year have been disappointing as it took measures to improve air quality in Beijing during last month’s Summer Olympics and as it imposed restrictions on the manufacturing sector. China’s crude imports averaged 9.9m bpd in January and February this year, down by about 1m bpd year on year.

The General Administration of Customs said early this month that crude imports for January and February was 85.1m tonnes, or about 10.5m bpd, compared with 11.1m bpd in the same period a year earlier.