Indian refiners are undergoing a strategic shift in their crude oil procurement patterns, with UAE’s Murban crude emerging as the preferred choice amidst evolving market dynamics.
This transition comes as cargoes of the light sweet equivalent Sokol from Russia faced disruptions due to payment issues and western sanctions on crude oil transport above the G7 price cap. The dwindling availability of light sweet crude from Nigeria, coupled with the higher transportation costs associated with sourcing similar grades like WTI from the US, has further bolstered Murban’s position in the Indian market. Data from energy intelligence firm Kpler indicates a notable increase in Murban shipments to India, while quantities of WTI crude from the US have tapered down since mid-March.
Throughout 2023, Indian refiners averaged sourcing over 104,200 barrels per day (b/d) of Murban from the UAE. However, this figure has surged to more than 265,000 b/d in the initial four months of 2024, signalling a significant uptick in Murban’s prominence in the Indian crude oil procurement landscape. Traditionally, India has relied heavily on heavy sulphur or sour crude grades, which constituted over three-fourths of the country’s total crude oil processing. Nevertheless, there has been a notable decline in the processing of light sweet crude in recent fiscal years, with figures dropping from around 1.24 million barrels per day (mb/d) in FY20 and FY21 to 1.13 mb/d in FY23 and FY24.
Despite Murban’s growing popularity, market dynamics have led to a reduction in the Murban-Dubai swaps spread, which has halved to $0.78 per barrel in 2024. In some instances, Murban has even traded at a discount vis-a-vis Dubai, reflecting the evolving complexities of the crude oil market. As Indian refiners navigate these shifting dynamics, the strategic preference for Murban highlights the importance of adaptability in an increasingly volatile global oil market. The surge in Murban shipments underscores the need for agile procurement strategies to optimise operational efficiency and mitigate supply chain risks in the face of evolving market conditions.
