India imported 420,000 fewer barrels of Russian oil a day in February amid tightening sanctions

• Russian oil shipments to India fell by 420,000 barrels per day, the International Energy Agency reported.

• Falling output has clipped Russia's monthly energy revenue, which slid nearly 1% from January.

• Western sanctions are driving India's pull back, as they erode Russia's crude discount.

India pulled back on purchasing Russian crude in February, as Western sanctions took a toll on trade between the two countries.

Oil shipments to India fell by 420,000 barrels per day, totalling 1.2 million barrels imported daily, according to the latest report from the International Energy Agency.

New Delhi's strained demand contributed to a slip in Russian crude revenue for the month. Reduced oil and oil product exports earned Moscow nearly 1% less than in January, notching $15.69 billion last month.

Though in line with December's revenue, Russia's global crude shipments fell to 4.75 million barrels per day, below a year-end peak of 5 million barrels per day.

Partially offsetting lower output were rising crude prices, with Urals, the benchmark Russian crude mix, rising over $4 per barrel in February.

However, Indian buyers have turned away from Russia for this same reason, given that discounted barrels were the main driver behind New Delhi's demand. In 2023, India became the biggest buyer of Russian seaborne crude, as Western sanctions eroded Russian prices.

Now, Indian refineries are moving away from long-term contract deals with Russia, and the country's largest state-owned company, Indian Oil, is contemplating a decrease of Russian crude in its long-term supply.

It's a shift spawned by tighter enforcement of Western sanctions this year, as the US and its allies penalize entities that breach restrictions, such as the $60-a-barrel price cap on Russian crude.

In February, the US followed up with a slew of new sanctions, adding to freight costs and diminishing the oil discount, Indian sources previously told Reuters.

Such factors are a key reason India has already started turning back to its traditional energy trade with the Middle East, especially after Saudi Arabia offered its own crude discount in January.

That same month, Indian Minister of Petroleum and Natural Gas Hardeep Singh Puri warned that trade would shift away from Russia if sanctions were violated.

"When Russian prices don't conform, we buy from Iraq, the UAE, Saudi Arabia," he then said.

But while India backed down through February, shipments to China rose to 2.2 million barrels a day, marking a month-on-month jump of 100,000 barrels per day, the IEA said.

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