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Buyer interest in Russian Oil is up in Asia but prices are stable, traders say

Five traders said that concerns about Middle Eastern oil supply are causing buyers to be more interested in Russian oil. However, prices haven't yet responded.

Analysts and traders said that disruptions to the flow of oil through the Strait of Hormuz, at the southern tip of Gulf, have led to a tightening of Middle Eastern grades.

Two traders and a source in the industry report that Indian refiners are contacting Russian suppliers about March and April deliveries.

Sources claim that Indian refiners have begun consulting the government on the possibility of "additional Russian exports".

Chinese buyers also show interest in the product, despite recent purchases leaving them with a surplus.

One trader stated that China "bought large quantities at low prices before the Lunar New Year so it could afford to wait until the outlook for the war in Iran became clearer."

One trader said: "Buyers are expecting the conflict in Iran to be resolved'soon, and they are unwilling to pay more for Brent at its current levels."

In recent months, China has taken in barrels that India had displaced, resulting in a multi-month increase of its seaborne purchase at deeply discounted rates, traders reported.

According to the latest LSEG data, the discount for Russian Urals crude loaded from the port Primorsk, free on board (FOB), was $25-26 a barrel to dated Brent. This is in line with recent estimates.

The discounts in Chinese and Indian port on a delivery-basis were also not much different from the levels before the start of conflict in Iran.

China and India have been the largest buyers of Russian crude oil, although India has recently reduced its purchases under pressure from Washington.

Indian imports are expected to drop sharply in April due to scheduled major maintenance at Nayara Energy, which is owned by Rosneft of Russia and a leading buyer.

The traders reported that other Indian refiners are also planning to reduce their purchases, though the turmoil in the Middle East has forced a few to re-evaluate their plans.

Interfax reported that Russian Deputy Prime Minister Alexander Novak stated on Wednesday Moscow was ready to increase oil supply to China and India. (Aizhu Chen and Siyi Liu in Singapore; Nidhh Verma in New Delhi, editing by Jason Neely.)

(source: Reuters)