Russian oil company’s bid failed because it demanded payment in rubles

Rosneft opened bids to sell 6.5 million tons of Urals, Siberian Light, Sokol and ESPO Blend oil from Russian ports in May-June but no bids were submitted on April 25, 5 traders revealed with Reuters.

Meeting bidding terms was extremely difficult, traders said. Buying and selling is difficult enough without up-to-date terms as most major European companies and even commercial companies are avoiding buying from Rosneft.

India’s state refiners failed to submit bids while volumes of Far Eastern grades, Sokol and ESPO Blend, were too fast to attract interest.

“Specific terms and thin timeframes require individual negotiations,” said a source from an Asian trading firm. The source revealed that some of the oil being tendered could be sold in separate arrangements.

Another source familiar with the Rosneft tender said that the main objective of the tender was to “inform the market to demand payment in rubles” and that this goal was achieved.

Last week, Rosneft requested 100% prepayment and converted the payment to ruble to buy oil from the company.

Russia has faced a number of oil export problems since March due to sanctions but pledged to boost cooperation with Asia to redirect some of its oil sales from the West.

Western sanctions on Russian oil are part of a broader effort to isolate Russia politically and economically after the war in Ukraine. The sanctions under discussion also include an EU-wide Russian oil embargo.

The European Union also recommends that its members not pay in rubles to buy gas from Russian gas company Gazprom.

The EU is highly dependent on Russian gas rather than oil. Analysts and economists say a complete embargo on Russian gas will plunge the continent into a deep recession.