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India’s demand for cheap Russian crude is insatiable as some of the largest Indian refiners are looking to negotiate six-month supply deals with Russia’s oil giant Rosneft at a time when Western buyers avoid dealing with Moscow’s crude, sources with knowledge of the Indian firms’ plans told Bloomberg on Monday.
State-owned refiners Indian Oil Corporation, Hindustan Petroleum, and Bharat Petroleum, and private firms including conglomerate Reliance Industries, as well as partly-Rosneft-owned Nayara Energy, are among those seeking additional supply from Rosneft, Bloomberg’s sources say. The terms of the deals are still being negotiated, but it is expected that Rosneft would handle the insurance and shipping coverage.
The additional purchases, if agreed, would add to the other deals under which India buys Russian crude, according to Bloomberg’s sources.
Indian imports of Russia oil are not illegal per se, but India has drawn the attention of the Western allies that seek to cripple Russian oil revenues.
With Russian crude selling at a record discount relative to Dated Brent, the cheap Russian oil is attracting India’s price-sensitive buyers to the point that Russia became the fourth largest oil supplier to India in April, moving up from the 10th place in March, according to shipment-tracking data compiled by Reuters.
The significant increase in India’s purchases of Russian crude has already drawn the attention of the United States, which has reportedly sent a U.S. federal government official to discuss U.S. sanctions on Russia and try to convince India to reduce its purchases of Russian oil.
India, the world’s third-largest crude importer which relies on imports for more than 80 percent of its oil consumption, has seen a surge in its imports of Russian crude since the Russian invasion of Ukraine in late February.
In May alone, India imported over 24 million barrels of Russian crude, compared to 7.2 million barrels in April, which was the previous record high, according to data from Refinitiv Eikon cited by Reuters last week.
Indian imports of Russian crude are set to further jump in June, to around 28 million barrels, per Refinitiv Eikon oil flows data.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.