RIYADH: Oil prices slumped to near two-week lows on Monday, extending losses from last week, as concerns grew that prolonged COVID-19 lockdowns in Shanghai and potential US rate hikes would hurt global economic growth and fuel demand.
Brent crude LCOc1 futures were down $3.15, or 3.0 percent, at $103.50 a barrel by 0326 GMT. They touched $103.41 earlier in the session, the lowest since April 12.
US West Texas Intermediate crude futures fell $3.01, or 3.0 percent, to $99.06 a barrel, having skidded earlier to $98.93, the lowest since April 12.
The benchmarks lost nearly 5 percent last week on demand concerns.
Abu Dhabi crude replacing Russian oil
A shipping unit of France’s TotalEnergies has provisionally chartered a tanker to load Abu Dhabi crude in early May for Europe, the first such shipment in two years, according to traders and a shipping report on Monday.
CSSSA, TotalEnergies’ shipping arm, chartered Suezmax tanker Moscow Spirit to load 1 million barrels of Murban crude from the port of Jebel Dhanna in the UAE for Britain on May 1-3 at a world-scale rate of 60 points, the shipping report showed.
Abu Dhabi’s Das crude was last loaded for Italy in May 2020, Refinitiv Eikon data showed.
The arbitrage window for Middle East crude to head to Europe opened after European buyers shunned Russian oil following Russia’s invasion of Ukraine, what it calls “a special operation.”
More cargoes of Abu Dhabi crude grades — Murban, Das and Upper Zakum — are expected to head to Europe in the months to come to replace the Russian shortfall as the EU prepares more sanctions on Russian oil imports, traders said, possibly diverting some supplies away from Asia.
The global trade flow is “readjusting” to reflect changes in Russian oil supplies, one trader said.
India’s Russian oil purchases double since Ukraine invasion
India has bought more than twice as much crude oil from Russia in the two months since the invasion of Ukraine as it did in the whole of 2021, according to Reuters calculations, as Indian refiners snapped up discounted oil that others have shunned.
Refiners in India have placed orders for at least 40 million barrels of Russian oil since the invasion on Feb. 24, Reuters calculations based on information from crude tenders and traders show.
The purchases are for loading in the June quarter.
That compares with total imports of Russian oil into India of 16 million barrels in the whole of last year, according to Reuters.
The world’s third-biggest oil importer and consumer ships in over 85 percent of its crude oil needs of 5 million barrels per day.
Its refiners are buying cheaper Russian oil to partly offset the impact of higher official selling prices of some producers like Saudi Arabia, company sources said.
“We try to insulate consumers as much from price shocks as we can, but we need to protect our profits as well... so we are buying Russian oil,” an official at one refiner, who declined to be named, said.
According to Reuters calculations, purchases of Russian barrels by private refiners Reliance Industries and Nayara Energy outstrip imports by state refiners Indian Oil Corp., Hindustan Petroleum Corp., and Bharat Petroleum Corp.
Reliance has purchased at least 15 million barrels of Russian oil so far for the June quarter, trade sources said last week.
Reliance did not respond to a request for comment at that time.
Russian oil imports are not sufficient for India’s needs
Defending India’s oil imports from Russia, the country’s oil minister Hardeep Singh Puri said that India’s purchases from Russia are a minuscule fraction of the country’s overall oil needs.
Indian companies are buying Russian oil on a delivered basis, with sellers arranging for shipping and insurance.
Washington has already said it does not object to New Delhi buying Russian oil below market rates but warned against a steep rise in imports as that could hamper the US response to the war in Ukraine.
Fire breaks out at Russian oil depot
A large fire was reported early on Monday at an oil storage facility in the Russian city of Bryansk, Russian news agencies said, citing the emergency services ministry, but gave no details.
There was no immediate indication the fire was related to the war in Ukraine, although Russian officials said last week that Ukrainian helicopters hit residential buildings and injured seven people in the area.
Bryansk is an administrative center 154 km northeast of the Ukrainian border, near the Sumy and Chernihiv regions, and is about 380 km (236 miles) distant from Moscow, the Russian capital.
Moscow calls its actions in Ukraine, now entering their third month, a special military operation.
(With inputs from Reuters)