ROI-Asia gobbles up crude oil, but geopolitics is shifting supplier mix: Russell

By Clyde Russell

LAUNCESTON, Australia, Feb 18 (Reuters) - Asia's imports of crude oil are on track to hit a record high in February as the recent strong run continues, but the mix of suppliers is starting to shift in response to geopolitical dynamics.

The world's top-importing region is expected to see seaborne arrivals of 28.51 million barrels per day (bpd) in February, the highest total on a daily basis in records compiled by commodity analysts Kpler.

The strong February imports come on the heels of robust arrivals of 27.48 million bpd in December and 26.22 million bpd in January, according to Kpler data.

Much of the elevated appetite for crude comes from China and India, the world's biggest and third-largest buyers, respectively.

However, the data is also showing that the recent geopolitical disruptions are starting to influence flows of crude into the region.

India provides a case in point, with February imports expected to reach 5.40 million bpd, up from 5.18 million bpd in January.

Kpler's early estimate of India's March imports is 4.04 million bpd, but this will be revised higher as more cargoes are assessed, especially from the Middle East.

But the March data shows a sharp drop in expected arrivals from Russia, down to 593,000 bpd, a 59% slump from the 1.43 million bpd in February and the 1.22 million bpd in January.

While it is still possible that Kpler will revise the March total higher, it's also likely that any increase will be mild, given the four- to six-week voyage from Russia's western ports to India, meaning that March arriving cargoes are likely already at sea.

The precipitous drop in India's imports of Russian crude follows New Delhi's trade deal with Washington, the terms of which include India cutting imports from Russia while boosting those from the United States.

So far India does seem to making good on the commitment to cut imports from Russia, its top supplier, but it has yet to lift those from the United States.

In fairness, it will take several months yet for any boost to crude arrivals from the United States to show up given the longer sailing times, but Kpler estimates March imports at just 161,000 bpd, the weakest since February 2025.

SAUDI GAINS

The main beneficiary of India moving away from Russia would appear to be fellow OPEC+ member Saudi Arabia, with February imports expected to reach 1.03 million bpd, up from 774,000 bpd in January and the most since November 2019, according to Kpler data.

The sharp jump in imports from the world's biggest exporter comes as the kingdom's state-controlled oil company Saudi Aramco 2222.SE lowers its official selling prices (OSPs), a move widely seen as an effort to boost competitiveness and thereby market share.

The March OSP for the benchmark Arab Light grade for Asian refiners was cut to parity to the Oman/Dubai average, down from a premium of 30 cents a barrel for February.

This was the lowest OSP since December 2020 and continued a recent pattern of reducing the cost of Saudi oil relative to its competitors.

The lower Saudi price is also showing up in China's imports, with Kpler expecting arrivals of 1.58 million bpd in February, up from 1.20 million bpd in January and the most since June last year.

China's March imports from Saudi Arabia are expected to reach as high as 1.87 million bpd, the most since October 2022, according to trade sources.

However, China is sticking with Russia as a top supplier, with February seaborne imports expected at 2.02 million bpd, up from 1.85 million bpd in January.

China's January and February imports from Russia are the highest in Kpler records going back to 2013, and show that Beijing is still willing to buy crude sanctioned by Western governments, with the discounts offered enough to outweigh political concerns.

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The views expressed here are those of the author, a columnist for Reuters.