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Crude one-upmanship: G7 oil price cap on Russia turns on the US tap
Crude oil shipments from the US to India rose to the highest levels in November since the conflict began in Ukraine in late February, sparking hopes of a resurgence in oil flows from the US to the subcontinent, reveals shipping data.
Shipments from the US have surged as Western nations prepare to impose additional sanctions on Russian crude flows.
The US shipped around 450,000 barrels per day of crude last month to India, over twice that of shipments in September and October, according to data from London-based commodity intelligence provider Vortexa. That compares with around 200,000 barrels per day in October and September, shows data.
The February volumes were over 500,000 barrels per day, says Vortexa, which calculates crude flows using the ship-tracking software. Delivered volumes of the US crude were as high as 700,000 barrels per day in February, shows Indian Customs data, which reports delivered cargo.
Their data tends to differ from the ship-tracking data offered by commodity data analytics companies. The US volumes plunged in May to as low as 101,000 barrels per day – the lowest this year.
“While Russian volumes are still strong, there is a marked increase in barrels from the US in November to India – likely a result of the wide Brent-West Texas Intermediate (WTI) spread,” says Matt Smith, a senior analyst at Paris-based commodity data provider Kpler. The spread was as high as $9.3 in mid-November, meaning the US benchmark was much cheaper last month.
Washington has been concerned over losing billions of dollars in oil export revenues to Russia after Moscow became the biggest supply source for India since September, partly displacing US oil. It expects flows into India to stabilise after the Group of Seven nations and Australia agreed on a $60-per-barrel price cap on exports of Russian oil from December 5. The cap is close to the $67-per-barrel price of the Russian Urals blend, which itself is at a discount of about 20 per cent to the Brent – a pricing benchmark for the Atlantic Basin oil – and at a 16 per cent discount to the WTI – a US oil benchmark. The delivered cost of the US crude to India in September was $104 per barrel, while Russian grades were cheaper at $90 per barrel.
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