India increased imports of Saudi oil in December as payment problems drove its Russian oil buys to an 11-month low, with at least five cargoes of the sweet Sokol variant heading to other locations, data from vessel tracking agencies showed.
Indian Oil Corp (IOC) which was set to get the Sokol oil, had to withdraw from its inventory and buy from the Middle East to make up the shortfall, sources told Reuters last month.
Top refiner IOC is the only state-run firm with an annual deal to buy a variety of Russian grades, including Sokol, from Russian oil major Rosneft.
India's oil imports from Russia in December declined between 16% and 22%, according to Reuters calculation based on data from flow tracking agencies Vortexa, Kpler, and the London Stock Exchange (LSEG).
However, data from Kpler and Vortexa showed that India's imports of Saudi oil rose by about 4%.
LSEG data shows India's monthly Russian oil imports declining by 22% to 1.21 million barrels per day (bpd) in December, while Kpler shows a drop of 16% to 1.39 million bpd.
Meanwhile, oil prices jumped by more than 2 percent on Tuesday, in the first session of the new year, amid fears of a possible disruption of supplies from the Middle East and hopes of an improving demand outlook in China.
Brent crude rose $1.58, or 2 percent, to $78.62 per barrel. US West Texas Intermediate crude recorded $73.21 per barrel, an increase of $1.56, or 2.2 percent.
The risks of the conflict between Israel and the Gaza Strip becoming a broader regional conflict increased over the weekend after US helicopters returned fire against Houthi boats that targeted the Maersk Hanzghou in the Red Sea.
A spokesman for Maersk said the company would decide on Tuesday whether to resume operating through the Suez Canal from the Red Sea or redirect them around Africa after an attack on one of its ships over the weekend.
Leon Li, a Shanghai-based CMC Markets analyst, told Reuters that the oil price may be affected by the escalation in the Red Sea over the weekend and the peak demand season during China's Spring Festival.
The expansion of the conflict in Gaza could lead to the closure of vital waterways for transporting oil supplies.
Li added that forecasts for increased demand during China's Lunar New Year holiday in February also raised expectations for price increases this month.
At least four tankers transporting diesel and jet fuel from the Middle East and India to Europe are taking the longer route around Africa to avoid the Red Sea, ship tracking data show.
China's manufacturing activity shrank for a third straight month in December and weakened more than expected, clouding the outlook for the country's economic recovery and raising the case for fresh stimulus measures in the new year.
