India bargains with Russia to lower oil prices further

Bloomberg, citing sources familiar with the matter, said that India is trying to negotiate to reduce oil prices Russia deeper to offset the risks of trading with Moscow in the context of Western sanctions.

During the negotiations between the two sides, India is said to want Russia to reduce the price of oil to below 70 USD/barrel for regular delivery orders, to compensate for risks such as financial security for the purchase. . Brent oil price is trading at nearly 108 USD/barrel.

State-owned and private oil companies from India – the world’s third-largest oil importer – have purchased more than 40 million barrels of Russian crude since Moscow launched a military operation in the region. Ukraine at the end of February. This is 20% more than the total volume of oil that India bought from Russia for the whole of 2021, according to Bloomberg calculations based on data from the Ministry of Commerce.

India – which imports more than 85% of its domestic oil consumption – is one of the few remaining buyers of Russian crude. Oil exports are a major source of Moscow’s revenue. European sanctions are putting serious pressure on the industry Russian oilthe government forecasts output could fall by as much as 17% this year.

The flow of Russian oil to India is not sanctioned, but tightening international restrictions in areas such as marine insurance and pressure on New Delhi from Washington are making it more difficult to buy. Prime Minister Narendra Modi has so far rejected calls from the West to narrow ties with Russia because of the opportunity to lower oil prices. India is also heavily dependent on Russian arms imports.

India’s state-owned refineries could consume around 15 million barrels per month – about 10% of total imports – if Russia agrees to the price demands and supplies India with oil. State-owned refiners would benefit from any potential deal. Private refineries such as Reliance Industries Ltd. and Nayara Energy Ltd. usually buy crude oil separately.

According to an official statement by the Indian press office, energy purchases from Russia are still very small compared to India’s total consumption. “India’s legal energy deals cannot be politicized. Energy flows are not punished,” the statement said.

Moscow is looking for a way to ship oil smoothly to India – both from the west via the Baltic Sea and on routes from the Russian Far East, which is more accessible during the summer.

The two countries are even exploring the possibility of rerouting some crude oil routes through Vladivostok in the Far East. Although shipping via sea route from there to India would be faster, but would likely cost more and involve logistical problems when transporting oil overland.