India is in talks with traditional Middle Eastern crude exporters to increase purchases as Russian imports lose their price advantage, according to a government official.
The discount on Russian crude has narrowed sharply, making the Urals, the country’s main export grade, less attractive, making it prudent to buy from trusted suppliers, the official said, declining to be identified by citing rules.
India and China have been the two dominant buyers of Russian crude since the invasion of Ukraine more than a year ago after the war prompted other countries to shun the OPEC+ producer. The South Asian nation’s oil imports from Russia may also fall as a rise in oil prices could make payments above a price cap difficult for refiners, the official said.
Western nations have allowed countries to import crude from Russia, using European ships and insurance, as long as the commodity is bought at a maximum price of $60 a barrel.
India has been paying Russia mainly in dollars, but now also in dirhams and yuan in order to maintain trade flow. Indian Oil Corp. it was the first state-owned refinery in Russia to be paid in yuan. The official said Indian refiners buy most of Russia’s crude in the spot market from traders where the seller has to hire vessels and insurance.
However, Indian Oil is the only refinery that has a forward agreement with state-owned Rosneft to make long-term purchases. Europe expressed concern over a Rosneft crude oil tanker, for which the State Bank of India refused to process payment even though the crude was below the price limit. This forced Indian Oil to arrange an alternative payment in yuan through another bank, the official said. These problems have affected the decision of other state-owned companies to sign long-term agreements with Russia for crude imports.
–With the assistance of Pratik Parija.
