The timing of Ukrainian drone attacks on refineries is creating an interesting situation for oil tanker markets.
Let's connect some dots:🧵
Ukrainian drones have hit 12 Russian oil refineries so far. While this has not (yet) had an outsized effect on product exports, we are one successful attack away from crack spreads spiking and importers looking for alternative sources. [map as of 13 March]
Last Wednesday, Ukrainian drones targeted Surgutneftegas PJSC’s Kinef refinery in Kirishi, on the Baltic coast. Kinef is a major export fuel production facility. Any significant disruption there “would have knock-on effects on the global diesel market.” (BBG)
India imported 2.1m b/d of crude from Russia in May, nearly half of its total crude imports in May
Russian crude deliveries to India were more than the combined imports from the next 6 largest suppliers, Iraq, Saudi Arabia, UAE, Mexico, Kuwait and the US, for the first time
2.
Majority of the Russian crude shipments to India comprise of Urals, which continue to trade below the $60/bbl G7 price cap on a FOB basis
India imported ~ 200k b/d of ESPO in May, which could persist as Chinese demand weakens along with high crude inventories (Argus)
3.
India has binged on discounted Russian crude since Feb 2022, with the government repeatedly indicating that it is willing to buy crude wherever it is cheap, ignoring pressure from the West