Discounts on Russian oil imported by India have surged in the past two months, almost doubling to a range of $8 to $10 per barrel. This increase in discounts came as state-owned refiners applied pressure on suppliers and temporarily reduced their intake of Russian oil, individuals familiar with the situation told ET.
The rise in discounts has stimulated imports, boosting the share of Russian oil in India’s overall crude imports. In September, it reached 38%, up from 33% in August. State-run refiners, which account for two-thirds of Russian imports, witnessed a substantial 25% increase in Russian oil imports in September, rebounding from a 30% decline in August. Notably, state refiners are procuring Russian oil primarily from non-Russian entities to secure more favorable discounts and avoid payment complications, as indicated by the sources.
These suppliers are typically resourceful traders with the capability to source Russian oil and safely transport it to Indian ports, circumventing concerns related to sanctions and logistical constraints. Nearly all Russian oil purchases by state refiners are conducted in the spot market. Russian oil constitutes approximately half of Bharat Petroleum Corporation’s total crude purchases and about a third of the crude sourced by Indian Oil Corporation and Hindustan Petroleum Corporation, according to the sources.
Payments for Russian oil by state refiners are made in US dollars and UAE Dirham, based on the suppliers’ preferences. However, the use of Chinese Yuan for payments has ceased following government expressions of discontent to refiners on this matter. It’s worth noting that China is keen to internationalize its currency, and its use for oil payments could significantly further this objective. Despite procuring Russian oil at rates higher than the G7 countries’ price cap of $60 per barrel, Indian refiners can still manage the payments, as per the sources.
Individuals responsible for enforcing G7 sanctions comprehend that curbing Russian oil flows could lead to a considerable surge in oil prices, a scenario that is undesirable even for G7 nations. Brent, the global crude benchmark, has advanced by approximately $15 per barrel over the past four months, reaching $90 per barrel. Any further increase could exacerbate inflation, a challenge that central banks in developed countries have been grappling with for over a year.
The rise in discounts has stimulated imports, boosting the share of Russian oil in India’s overall crude imports. In September, it reached 38%, up from 33% in August. State-run refiners, which account for two-thirds of Russian imports, witnessed a substantial 25% increase in Russian oil imports in September, rebounding from a 30% decline in August. Notably, state refiners are procuring Russian oil primarily from non-Russian entities to secure more favorable discounts and avoid payment complications, as indicated by the sources.
These suppliers are typically resourceful traders with the capability to source Russian oil and safely transport it to Indian ports, circumventing concerns related to sanctions and logistical constraints. Nearly all Russian oil purchases by state refiners are conducted in the spot market. Russian oil constitutes approximately half of Bharat Petroleum Corporation’s total crude purchases and about a third of the crude sourced by Indian Oil Corporation and Hindustan Petroleum Corporation, according to the sources.
Payments for Russian oil by state refiners are made in US dollars and UAE Dirham, based on the suppliers’ preferences. However, the use of Chinese Yuan for payments has ceased following government expressions of discontent to refiners on this matter. It’s worth noting that China is keen to internationalize its currency, and its use for oil payments could significantly further this objective. Despite procuring Russian oil at rates higher than the G7 countries’ price cap of $60 per barrel, Indian refiners can still manage the payments, as per the sources.
Individuals responsible for enforcing G7 sanctions comprehend that curbing Russian oil flows could lead to a considerable surge in oil prices, a scenario that is undesirable even for G7 nations. Brent, the global crude benchmark, has advanced by approximately $15 per barrel over the past four months, reaching $90 per barrel. Any further increase could exacerbate inflation, a challenge that central banks in developed countries have been grappling with for over a year.