India has swung to buying Russian crude oil and coal to bolster its energy supplies after flows were disrupted and prices rose during the Iran conflict.

The world's third-largest oil importer is expected to see arrivals of Russian crude surge ?to a record high of 2.55 million barrels per day (bpd) in June, according to data compiled by commodity analysts Kpler.

June's imports from Russia would ‌be up from the 2.13 million bpd in May, which was the third-highest on record and just behind the 2.16 million bpd from May 2023.

Russia's share of India's total crude imports of 5.29 million bpd in June will be just under 50%, a sharp increase from the average 23% share in the three months prior to the start of the war on February 28, when the United States ?and Israel launched an aerial campaign against Iran.

India's pivot to Russian crude came after the administration of U.S. President Donald Trump waived sanctions against buying it ?as part of efforts to boost oil supply after Iran effectively closed the Strait of Hormuz in response to the U.S. and ?Israeli attacks.

The waiver expired on June 17 and the U.S. Treasury didn't extend it.

In theory this means that India should once again cut its imports of Russian crude, but whether ?it does depends on if its government and refiners have sufficient confidence to return to buying Middle East oil.

Certainly, India is still holding off buying from some Middle East ?producers, with imports from Saudi Arabia forecast by Kpler at 349,000 bpd in June, down from 832,000 bpd in the three months prior to the start of the Iran conflict.

RUSSIAN COAL

It's not only Russian crude that India has sought in recent months, with imports of coal also surging.

India is on track to import 3.16 million metric tons of all grades of coal from Russia in June, down slightly ?from the 3.27 million in May.

However, these two months are the second- and third-strongest on record behind the 3.76 million tons from May last year and June's imports ?are 51% above the average of the three months prior to the conflict.

Russia will overtake Australia to be the second-biggest supplier of coal in June to India, the world's second-largest importer behind China.

Russia ‌is also ?competing with Australia to supply metallurgical coal to India, which is buying more of the grade used to make steel as it increases its output of the industrial metal.

India's imports of Russian metallurgical coal were 2.02 million tons in May, the second-highest on record and above the average of 1.49 million tons in the three months prior to the start of the Iran war.

Imports from Australia were also strong in May at 4.05 million tons, the most since July last year, helping boost total metallurgical coal imports to a ?record 8.05 million tons.

India's steel output is ?expected to climb from around the current ?168 million tons a year to 400 million tons by 2035, with an estimated 25 million tons of capacity being added this year alone.

While India has vast reserves of thermal coal, used mainly to generate electricity, its metallurgical coal output is only about 6% ?of the total and what is produced is of lower quality than imports from Australia, Russia and other suppliers such as ?the United States and ?Mozambique.

This means that India is likely to continue to increase imports of metallurgical coal and will seek as diverse a range of suppliers as possible in order to reduce reliance on Australia, the world's biggest shipper of this grade of coal.

Overall, it's likely that Russia will remain a key supplier of coal to India, and while New Delhi would prefer to keep ?buying Russian crude ?oil, much will depend on whether the Trump administration does go back to trying to enforce sanctions ?against Moscow.

Source: Reuters 

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