Following the invasion of Ukraine, Russia is giving India huge discounts on direct oil sales, according to sources familiar with the subject. For India to increase supplies, the sanctions-hit Russia is providing its flagship Urals grade for up to $35 a barrel below pre-war pricing, the sources said on condition of anonymity.
Headline After a $10 jump in Brent prices, the discount to current pricing is much greater. Russia wants India to absorb 15 million barrels committed for this year, they claimed, adding government-to-government negotiations.
Despite international pressure and sanctions, China, Asia’s No. 2 oil importer, has increased its reliance on Russian petroleum. Following the invasion of Ukraine, purchasers in Europe and the US have shunned Russian barrels. The top purchasers were India and China.
Russia has also provided rupee-ruble payments through Russia’s messaging system SPFS, which might entice Indian traders. Nothing is finalised and will likely be addressed when Russian Foreign Minister Sergei Lavrov comes in India on Thursday for a two-day visit.
The direct purchase is anticipated to include Rosneft PJSC and Indian Oil Corp., who have an optional term deal for close to 15 million barrels per year. The high end of the purchasing range is unknown, although India is assumed to have limited taste for the grades supplied.
Indian Oil would only purchase when it is economical, according to the individuals, and a Russian discount might make the oil transaction possible even at greater freight.
“India’s consumption of Russian oil has been quite low for many years,” said Vandana Hari, founder of Singapore’s Vanda Insights. “The refineries can’t purchase a lot of Russian oil.”
Calls to Indian Oil were unanswered, and the Indian Oil Ministry refused to respond. State-run refiners surged in Mumbai. To surpass the benchmark index’s 0.1 percent increase, Indian Oil surged 2.3 percent and Hindustan Petroleum 2.4 percent.
India wants to increase medicinal, engineering, and chemical exports to Russia to close the trade imbalance produced by oil and armaments imports.
Since the conflict started, Urals crude has been discounted. A shipment of Urals was offered at a discount of $31.35 to the Dated Brent benchmark last week by Litasco, Russia Lukoil PJSC’s trading arm. There were no offers, and it was a bigger discount than Glencore Plc’s previous record-low offer. From Russia, China gets a different rating.
The US and its allies have sought to isolate and punish Russia for its invasion of its neighbour, but India has remained neutral. Despite international pressure, India has not publicly criticised Moscow’s action.
Published By – Damandeep Singh
Edited By- Kritika Kashyap
