Wednesday 25 May 2022
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India to ask Russia to export oil at less than $ 70 a barrel

India — which imports more than 85% of its oil — is among the few remaining buyers of Russian crude, a key source of revenue for Vladimir Putin’s regime

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Amid Nordic nations condemning Russia in the presence of Prime Minister Narendra Modi in Copenhagen, Denmark, India is trying to get further discounts on Russian oil to compensate for the risk of dealing with the OPEC+ as other buyers turn away. The South Asian nation is seeking Russian cargoes at less than $ 70 a barrel on a delivered basis, sources said, to compensate for additional hurdles such as securing financing for purchases in high-level talks between the two countries. Global benchmark Brent is currently trading near $ 105 a barrel.

Both state and private refiners in the world’s third-biggest oil importer have bought more than 40 million barrels of Russian crude since the invasion of Ukraine in late February, the sources said. That’s 20% more 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 key source of revenue for Vladimir Putin’s regime. Evaporating European demand is putting severe pressure on Russia’s oil industry, with the government forecasting output could drop by as much as 17% this year.

Flows of Russian oil to India aren’t sanctioned, but tightening international restrictions in areas such as marine insurance and pressure on New Delhi from the US are making the trade more difficult. Prime Minister Narendra Modi has so far resisted Western encouragement to scale back its relationship with Moscow because of the opportunity to get heavily discounted oil. India is also highly dependent on imports of Russian weapons.

India’s state-run refiners can take about 15 million barrels a month — about a tenth of overall imports — if Russia agrees to the price demands and delivers the oil to India, the people said. Government-affiliated processors will stand to benefit from any potential agreement, they said. Private refiners such as Reliance Industries and Nayara Energy typically procure their feedstock individually.

The Indian government didn’t immediately respond to an email seeking comment.

Moscow is looking at ways to keep supplies flowing to India — both from the west via the Baltic Sea and on routes from the Russian Far East that become more accessible during the summer, the people said.

The two countries have even been exploring re-routing some crude through Vladivostok in the Far East. While the sea trip from there to India would be quicker there would likely be major costs and logistical hurdles with this.

Meanwhile in Copenhagen, as prime ministers of Norway, Sweden, Iceland, Finland, and Denmark issued a joint statement saying, “The Nordic Prime Ministers reiterated their strong condemnation of the unlawful and unprovoked aggression against Ukraine by Russian Forces,” they also pledged to continue to deepen cooperation between the Nordic countries and India and focused their discussions on key issues related to international and security, including the conflict in Ukraine, multilateral cooperation, green transition and climate change, the blue economy, innovation and digitalisation.

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