FEATURE: Bunker Market Steady as India Mulls Russian Crude Shift Amid US Tariffs

The US has imposed 50% tariffs on Indian imports. File Image / Pixabay

India's bunker market has so far remained stable despite mounting geopolitical pressure, with US President Donald Trump announcing an additional 25% tariff on Indian exports to the US in response to the country's continued imports of Russian crude. 

The move, which brings total US tariffs on Indian goods to 50%, is widely seen as a warning intended to push India away from Russian oil.

So far, the Indian bunker market appears unfazed, sources based in India told Ship & Bunker.

While prices at Indian ports rose briefly after the tariff announcement, they have since eased back to pre-tariff levels, one source said.

According to Ship & Bunker data, VLSFO prices in Mumbai rose to $563/mt on Monday but have since fallen to $555/mt, similar to levels seen last week. 

On Thursday morning, Brent crude futures were trading up by $0.64/bl from the previous session's close at $67.50/bl as of 7:30 AM in London. 

Some of the upward pressure is being attributed to a 3 million bl drop in US commercial crude inventories for the week ending August 1, according to EIA data. 

Refiners Hold Bunker Margins, Supply Looks Steady

"We haven't seen any changes in refinery premium," a source said.

The source added crude prices remain largely stable, adding that there have so far been no changes in refinery premiums for bunker fuels.

Overall, availability remains adequate across Indian ports, although some tightness is being seen at ports along the east coast.

"As of now, the bunker market is not impacted," another source said.

"But things could escalate if Trump continues to put pressure on India."

Debate Over Future of Indian Russian Oil Imports

According to energy cargo tracker Vortexa, India's imports of Russian crude are expected to decline from current levels.

"In the near term, we expect India's imports of Russian crude to decrease from July levels of 1.4mbd," Ivan Mathews, head of APAC analysis at Vortexa told Ship & Bunker.

"The main grade of Russian crude that is imported by India is Urals, which is a sour crude.

"India could substitute this with crude from the Middle East, which is mainly sour in quality.

"Moreover, with higher planned output from OPEC-8 in August and September, we could see more crude from Middle East countries such as Saudi Arabia, the UAE and/or Iraq heading to India during this period," Mathews added.

However, Mathews notes that most Middle East crude is bought on term contracts, limiting flexibility for prompt purchases.

"As such, India could purchase more crude from West Africa (WAF) and South America.

"Crude from these regions tends to be mainly sweet crude, hence higher arrivals would lead to India's import slate tilting slightly towards sweet crude." Mathews said.

Mathews does not see any changes to India's LSFO and HSFO production.

"Overall, do not expect major changes to India's LSFO vs HSFO production as the sweet/sour crude slate is unlikely to change significantly as explained above," Mathews noted.

"Moreover, refineries in India are highly complex with residue upgrading facilities, resulting in relatively lower fuel oil yields compared to light and middle distillates.

"Hence, fuel oil yields are unlikely to shift much," Mathews concluded.