Russia offers India big discount on purchase of 15 million barrels of oil
Russia is offering India big discounts on the direct purchase of oil as sales to other nations dip following stringent sanctions over its invasion of Ukraine, Bloomberg reported Thursday.
Russia is willing to sell high-grade oil up to $35 per barrel – which could increase to $45 per barrel after the latest surge in global prices – and wants India to buy 15 million barrels in the first deal.
Russia has also offered rupee-ruble-denominated payments using its SPFS financial messaging system – since Moscow has been banned from SWIFT – that could make trading more attractive for India, sources told Bloomberg.
The offer comes a day after foreign minister S Jaishankar, in talks with British foreign secretary Liz Truss, firmly defended India’s decision to buy discounted Russian oil – a move criticised by the United States and the United Kingdom.
The government pointed out Russia sells more to European nations than India and that it welcomes competitive offers to meet burgeoning domestic demand.
“When prices go up, I think it is natural for countries to look for good deals for their people,” Jaishankar said, pointing to reports that say European countries have bought nearly 15 per cent more oil from Russia in March than February.
“…if we wait two or three months and actually look at who are the big buyers of Russian oil and gas, I suspect the list would not be too different from what it used to be and I suspect we won’t be in the top 10 on that list.”
He also pointed out India – the world’s third largest importer – relies on supplies from the Middle East and that Russian sources were less than 1 per cent.
Oil is a key subject for India – which imports around 85 per cent of its needs; Iraq supplies 23 per cent, Saudi Arabia 18, and the United Arab Emirates 11.
Truss said, ‘I am not going to tell India what to do’ but emphasised the need for like-minded nations to work together to stop Putin’s ‘appalling invasion’.
Last month White House press secretary Jen Psaki said buying Russian oil would not violate US sanctions but she asked India to ‘think about where you want to stand’. She later acknowledged “… we made a decision… every country has not… they have different economic reasonings…”.
Global oil prices have surged since Russia invaded Ukraine on Feb 24, with brent crude hitting record highs. Prices have dropped since; it slid below $100 per barrel after ‘meaningful’ peace talks and the US’ release of reserves.
But prices will continue to fluctuate between $100 to $120 a barrel in the weeks ahead, a senior market analyst at Oanda Asia Pacific told Bloomberg.
India is thought to have already agreed deals to buy five million barrels – about a day’s requirement – between Indian Oil Corp. and Hindustan Petroleum Corp.