New Delhi:
India is trying to get deep discounts on Russian oil to offset the risk of a deal with the OPEC+ producer, as other buyers may be offended by it.
According to sources, India is seeking Russian cargo at less than $70 a barrel on a distributed basis to offset additional hurdles such as securing financing for purchases in high-level talks between the two countries. Global benchmark Brent is currently trading near $105 per barrel.
People with knowledge of the matter said both state and private refiners in the world’s third-largest oil importer have bought more than 40 million barrels of Russian crude since the invasion of Ukraine in late February. This is 20% higher than Russia-to-India flows for the whole of 2021, according to Bloomberg calculations based on trade ministry data.
India (which imports more than 85% of its oil) is among the few remaining buyers of Russian crude, a major source of revenue for Vladimir Putin’s regime. Europe is putting severe pressure on Russia’s oil industry and the government estimates output could drop by as much as 17% this year.
Prime Minister Narendra Modi has so far resisted Western incentives to downgrade its ties with Moscow because of the opportunity to obtain heavily discounted oil. India is also heavily dependent on Russian arms imports.
According to government officials, India’s government refiners could take about 1.5 million barrels a month (a tenth of total imports), if Russia agrees to demand prices and delivers oil to India. Government-affiliated processors would benefit from any possible settlement, he added. Private refiners like Reliance Industries and Naira Energy usually buy their feedstock individually.
Those familiar with the matter said Moscow is looking at ways to continue supplies to India on routes from the West to the Baltic Sea and Russia’s Far East, which become more accessible during the summer. Both countries are exploring re-routing some of the crude oil in the Far East through Vladivostok.
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