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Indian private conglomerate Reliance Industries has purchased at least 15 million barrels of discounted Russian crude since the start of the Russian invasion of Ukraine, Reuters reported on Friday, citing trade sources and tanker data, as Indian refiners take advantage of record discounts for Russia’s crude shunned in the West.
Reliance Industries—which owns the biggest refinery in India and the biggest refining hub in the world, Jamnagar—has bought on average 5 million barrels of Russian crude for delivery in each month between April and June, according to Reuters’ sources.
Reliance Industries is buying Urals—whose primary destination before the war was Europe—and is set to receive its first shipment of the ESPO crude, which is typically delivered to China, per Refinitiv tanker data cited by Reuters.
Since the beginning of the Russian war in Ukraine, India—a price-sensitive crude buyer who has criticized OPEC and OPEC+ for keeping oil prices “artificially high”—has increased its purchases of Russian crude. Before the war, Indian refiners rarely bought oil from Russia at such a scale because of high freight costs. Now the cheaper Russian barrels—with the flagship Urals grade being offered at a massive $30 a barrel discount to Dated Brent—appear irresistible for Indian refiners, despite warnings from the United States that buying Putin’s oil is not in the best interest of India.
India has abstained from joining almost all countries in the world in condemning Russia’s invasion of Ukraine in UN resolutions and has defense and military ties with Moscow.
India, as well as China, are snapping up cheap Russian cargoes unwanted in the West, but analysts say that the two Asian importers will not be able to absorb all the crude that Europe and major international oil firms and trading houses are shunning.
Putin is confident that Russia can find new willing buyers for its oil in Asia. China and India are taking some of the oil unwanted in the West. Still, logistics, high freight rates, insurance, bank guarantees, and payment hurdles prevent willing buyers in Asia from purchasing all the oil Russia has traditionally sold on the European market.
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.
Long before the Ukraine conflict erupted, Russia has started to shift its energy focus to Asia. So it makes not a jot of iota whether Western countries sanction Russian oil and gas exports since Russia has already a far bigger market in Asia.
Moreover, a Western ban on Russian oil and gas exports raises their prices so high that Russia will be able to more than offset a loss of some exports by higher energy prices.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London