India-US trade deal soon? Oil refiners asked to share weekly data on crude oil imports from Russia, US: Report

India has instructed refiners to report weekly crude import data from Russia and the United States to the Petroleum Planning and Analysis Cell as New Delhi seeks verifiable figures to support ongoing trade negotiations with the United States. Officials expect Russian crude inflows to fall below one million barrels per day in coming months; December shipments were about 1.2 million bpd, roughly 40% below a June peak near 2 million bpd. The request for weekly data and persistent friction over India's Russian oil purchases — amid US 50% tariffs imposed during the Trump administration — add uncertainty to talks but refiners have not been formally directed to cut Russian intake.

Analysis

Market Structure: India’s shift away from Russian seaborne crude (from ~2.0 m bpd peak to ~1.2 m bpd in Dec) transfers pricing power back to Middle Eastern and US suppliers and tightens access to deep-discount barrels; expect Indian refinery feedstock costs to rise if Russian flows fall below 1.0 m bpd over the next 1–3 months, compressing simple refinery margins by an estimated $2–6/bbl depending on slate. Shipping and insurance markets will benefit from route re‑optimisation and higher demand for non-Russia liftings, supporting VLCC rates and listed owners (FRO, EURN) in the near term.

Risk Assessment: Tail risks include rapid secondary US sanctions or punitive tariffs (>50% reinstated) that could force immediate reroutes and trigger sharp INR depreciation and capital outflows; conversely Russia redirecting crude to China could depress seaborne prices and hurt Gulf exporters. Time horizons: immediate (weekly data releases driving volatility), short-term (weeks–months for margin compression and trade negotiations), long-term (quarters–years for structural supplier diversification and investment in refining capacity).

Trade Implications: Tactical plays: long US/Gulf E&Ps (XOM, CVX) and selected tanker names (FRO) for 3–12 months; short or underweight Indian refiners reliant on cheap seaborne crude (IOC.NS, HINDPETRO.NS, BPCL.NS) if confirmed imports <1.0 m bpd for two consecutive months. Use Brent call spreads (3–6 month) to express upside limited to $10/bbl and buy 3–6 month freight exposure via FRO/EURN to capture short-term rate moves.

Contrarian Angles: Consensus may overstate an outright halt of Russian barrels — India has political and energy-security incentives to keep flows if price spreads exceed $6–8/bbl; weekly reporting could be diplomatic theatre to unlock a US trade deal rather than immediate curbs. If Russian volumes persist via alternative channels, global oil prices may not spike and Indian refiners could be resilient; size positions small (1–3% book) and use data triggers (two weekly prints <1.0 m bpd) to add exposure.

Key Decisions for Investors

• Establish a 2–3% long position in XOM and/or CVX (split 50/50) over 3–12 months to capture higher US/Gulf export demand; add if Reuters/Kpler show India Russian imports <1.0 m bpd for two consecutive weeks. Trim/stop if Brent basis falls >$8/bbl from current levels within 30 days.
• Initiate a 1.5–2% short position in IOC.NS and 1% short in BPCL.NS (or buy equivalent put structures) with a 3–6 month horizon to trade margin compression; enter after two weekly reports confirm imports <1.0 m bpd and set stop-loss if Indian Russian inflows exceed 1.2 m bpd.
• Buy a 3–6 month Brent 1:1 call spread (e.g., long 1 strike ATM, short +$10 strike) sized to 1–2% portfolio risk to express limited upside in oil if Russian-to-India flows fall materially; unwind if Brent returns <5% move within 4 weeks.
• Take a 1–2% tactical long in tanker owners (NYSE:FRO or EURN) to capture freight re‑routing for 1–4 months; add on a 10% pullback and exit if Suez/route demand indicators or VLCC charter rates fall 20% from peak.