India is trying to convince Russia to offer bigger crude oil discounts – Delhi is seeking to pay less than $70 a barrel – to offset risks in dealing with OPEC+ producer in light of sanctions increasingly harsh financial statements against Moscow following its invasion of Ukraine. Sources told Bloomberg that discounts are being sought to offset obstacles such as securing financing for purchases. Bloomberg said the Indian government did not immediately comment.
As of this writing, the global Brent benchmark is trading near $108 a barrel, down from a high of nearly $130 a barrel in the early days of the war.
Indian refiners – public and private – have bought more than 40 million barrels of Russian crude at a discount since Vladimir Putin launched his “special military operation” against Ukraine on February 24, Bloomberg said. Also last month, Russia offered India discounts on a one-time fixed purchase of 15 million barrels.
Russia offers India a discount on the purchase of 15 million barrels of oil
Total purchases are large in volume – 20% higher than Russia-India flows in 2021, according to Bloomberg calculations from Commerce Department data.
The purchases also drew pointed remarks from the West, including the United States and the European Union, but these were countered by the government pointing out that the EU had also bought more from the Russia and India welcomed competitive offers to meet domestic demand.
“When oil prices go up, I think it’s natural for countries to go out and look for bargains…” he said last month during a meeting with Britain’s foreign secretary. .
EU chief Ursula von der Leyen told the European Parliament on Wednesday of a proposal to completely eliminate dependence on Russian crude and refined oil.
EU chief proposes ‘comprehensive ban on imports of all Russian oil’ in six months
India – estimated to be the third largest consumer of primary fuels in the world with about five million barrels a day – imports about 85% of its oil needs but, historically, the contribution of Russian crude is marginal.
It was below 3% in 2021, according to estimates from S&P Global Commodity Insights. In fact, in March, government officials told Reuters that imports from the United States would rise 11% this year.
Shopping in today’s global environment – which has seen many normal Russian buyers turn away due to sanctions that complicate shipping and payment. The EU is preparing another wave which should target Russian oil, as well as banks in Russia and Belarus, and individuals.
The complications were evident last week when it emerged that India’s Oil and Natural Gas Corp, ONGC, was struggling to ship 700,000 barrels of crude from Russia’s Far East due to insurance issues and reputation.
India oil crisis: ONGC struggles to move Russian oil as sanctions bite
The flow of Russian oil to India is not sanctioned, but the tightening of restrictions in areas such as maritime insurance and shipping, as well as measures against financial institutions, mean that maritime trade with the Russia is getting tough.
There is also growing pressure on Prime Minister Narendra Modi to cut India’s relationship with Russia, but this is problematic on several levels, including access to heavily discounted crude and Moscow being a partner. defense key.
For its part, Moscow is keen to maintain supplies to India, as Delhi represents a valuable (and stable) source of income for Putin as he seeks to fund his military efforts in Ukraine.
With contributions from Bloomberg, Reuters