Caitong: India to stop buying Russian oil, new agreement accelerates boost to compliance demand, bullish for mid-term freight price center.

Caitong released a research report stating that in the current high prosperity environment of the external trade crude oil transportation industry, oil shipping companies are facing a round of performance release opportunities. In the medium term, with the expansion of upstream production, geopolitical events, and tightening of sanctions favoring supply and demand, the central shipping price is expected to continue to rise, giving oil shipping companies greater performance elasticity space. Recommended companies to focus on: China Merchants Energy Shipping (601872.SH), COSCO Shipping Energy Transportation (01138). Key points from Caitong are as follows: Events: On February 2, 2026, local time in the United States, President Trump announced that the United States and India had reached a trade agreement. Indian Prime Minister Modi agreed to stop buying Russian oil and purchase more oil from the United States, while also possibly buying oil from Venezuela. India also promised to significantly increase its purchases of American products, including energy, technology, coal, and many other products valued at over $500 billion. In return, the U.S. would reduce the 25% punitive tariffs on Indian goods to 18% and immediately cancel the previous 25% punitive tariff on Indian imports of Russian oil. Since the U.S. imposed punitive tariffs on India, India has gradually reduced its imports of Russian oil by sea. In August 6, 2025, President Trump signed an executive order imposing an additional 25% tariff on Indian products entering the U.S. for the reason of India "directly or indirectly importing Russian oil." Following this, India began seeking alternatives to Russian oil. According to Bloomberg data, India's total seaborne imports of Russian crude oil from September 25 to January 26 over five months amounted to 26 million tons, a decrease of 11.6% year-on-year, while imports from other countries increased by 12.7% to 73.94 million tons. In December 2025/January 2026, India's monthly seaborne imports of Russian oil were 5/3.7 million tons, a month-on-month decline of 33.3%/35.4%. Under the new agreement, India's cessation of Russian oil imports may accelerate the boosting of compliant oil shipping demand. In January 2026, India's seaborne imports of Russian crude oil were 3.7 million tons, equivalent to about 900,000 barrels per day, accounting for approximately 2.3% of the global daily seaborne crude oil volume in 2025. With subsequent policy implementation, India will stop buying Russian oil and shift its domestic demand to compliant crude oil, further supporting compliant market shipping prices. In addition, India's potential demand for imports of crude oil from the Americas will to some extent offset the impact of the reduction in shipping distances caused by oil shifting to the U.S. after military actions in Venezuela. Risk Warning: Significant decrease in crude oil demand, OPEC+ production increases less than expected or shifting towards production reductions, sanctions not implemented as expected, war risks, etc.