The sanctions-hit country is offering its flagship Urals grade to India at a discount of $35 a barrel over pre-war prices, people said, asking not to be identified, discussing confidential deliberations. Since then the headline Brent price has increased by around $10, which means an even bigger reduction from current prices.
He said that Russia wants India to take the 15 million barrels contracted for this year, he said, adding that talks are taking place at the government level.
Asia’s No. 2 oil importer is among a handful of countries that are doubling down on Russian crude, defying international pressure and sanctions. More volumes of Russian barrels are flowing into Asia as buyers across Europe and the US cut off supplies following Ukraine’s invasion. India and China have been major buyers.
Ukraine war live: We appreciate India not taking unilateral path, says Russian FM
He said Russia has also offered rupee-ruble-denominated payments using Russia’s messaging system SPFS, which could make business more attractive to India. No final decision has been taken and the matter will likely be discussed when Russian Foreign Minister Sergei Lavrov visits India on Thursday for a two-day visit.
The direct purchases are expected to include Russia’s Rosneft PJSC and the Asian country’s largest processor Indian Oil Corp, which have an alternative term contract – which is rarely used – of about 15 million barrels per year. It is not clear what could be the upper end of the buying, but there is believed to be a limited appetite for the grades that India has to offer.
There is an implicit clause in that contract that IndianOil will buy only if it is economical, the people said, adding that the waiver given by Russia could make the oil trade viable even on high freight charges.
“Russian oil consumption in India has been very low for many, many years,” said Vandana Hari, founder of Wanda Insights, an oil market analysis provider in Singapore. “So the refineries are not configured to buy a lot of Russian oil.”
IndianOil representatives did not immediately respond to calls seeking comment and India’s oil ministry declined to comment.
Shares of India’s state-owned refiners rose in Mumbai. Indian Oil climbed 2.3% as of 10:53 am, while Hindustan Petroleum rose 2.4%, compared with a 0.1% gain in the benchmark index.
Both sides are exploring oil through Russia’s Vladivostok port in the Far East to avoid shipping bottlenecks from the Baltic Sea in the country’s west. From there, oil consignments could reach India’s east coast refineries in less than 20 days, he said.
India is trying to push for greater exports of drugs, engineering goods and chemicals to Russia to bridge its trade gap created by oil and weapons purchases.
Ural crude has been trading at a discount since the start of the war. Litasco, the trading arm of Russia Lukoil PJSC, offered cargo of the Ural at a discount of $31.35 to the dated Brent benchmark in a pricing window conducted by S&P Global Platts last week. There were no bids, and it was a deeper discount than the record-low offering by Glencore plc a week earlier. China buys different grade of oil from Russia.
India has maintained a soft stance against Russia’s actions, while the US and its allies have sought to isolate and punish Moscow over its neighbor’s aggression. India has not directly condemned the Moscow attack even under international pressure.
New Delhi’s efforts to circumvent the SWIFT system and adopt cheaper Russian oil have also drawn criticism from its allies in the quad grouping, which includes the US, Australia and Japan. Other countries like Britain have also put pressure on India.
On Thursday, Britain’s Foreign Secretary Elizabeth Truss called Russia the “number one” threat to the world order. Speaking at an event with his Indian counterpart Subrahmanyam Jaishankar, he also called for more sanctions on Russian banks.
Jaishankar called it a “concrete campaign against India’s oil purchases from Russia”.
“India is not among the top 10 buyers of Russian oil,” he said.