India looking for even bigger discounts on purchase of Russian oil: Report

India is trying to convince Russia to offer deeper discounts on crude oil – Delhi is looking to pay less than $70 per barrel – to offset risks in dealing with the OPEC+ producer in light of increasingly harsh financial sanctions against Moscow over its invasion of Ukraine. Sources told Bloomberg discounts are being sought to compensate for hurdles like securing financing for purchases. Bloomberg said the Indian government did not immediately comment.

Global benchmark Brent is currently trading near $105 a barrel, down slightly from record highs in the initial days of the war.

Indian refiners – state and private – have bought over 40 million barrels of discounted Russia crude since Vladimir Putin launched his ‘special military op’ against Ukraine on February 24, Bloomberg said. Last month too Russia offered India discounts on a fixed one-time purchase of 15 million barrels.

Russia offers India big discount on purchase of 15 million barrels of oil

Total purchases are significant in volume – 20 per cent more than Russia-India flows in 2021, according to Bloomberg calculations from trade ministry data. 

The purchases have also invited pointed remarks from the West, including the United States and the European Union, but those were countered by the government pointing out EU nations too had bought more oil from Russia and that India welcomed competitive offers to meet domestic demand.

“When oil prices go up, I think it is natural for countries to go out and look for good deals…” he said last month in a meeting with the UK foreign secretary.

EU chief Ursula von der Leyen on Wednesday told the European parliament of a proposal to fully phase out dependency on Russian oil, crude and refined.

EU chief proposes ‘complete import ban on all Russian oil’ in six months

India – estimated to be the third largest primary fuel consumer in the world with around five million barrels daily- imports about 85 per cent of its oil needs but, historically, contribution of Russian crude is marginal.

It was less than three per cent in 2021, according to estimates by S&P Global Commodity Insights. In fact, in March government officials told Reuters imports from the US would rise by 11 per cent this year.

Purchases in the current global context – which has seen many of Russia’s normal buyers turn away because of sanctions that complicate shipping and payment. The EU is prepping another wave that is expected to target Russian oil, as well as banks in Russia and Belarus, and individuals.

Complications were evident last week when it emerged India’s Oil and Natural Gas Corp, ONGC, is struggling to ship 700,000 barrels of crude from Russia’s Far East because of insurance and reputational difficulties.

India’s oil crisis: ONGC struggles to move Russian oil as sanctions bite

Flow of Russian oil to India isn’t sanctioned but tightening international restrictions in areas like marine insurance and shipping mean maritime trade with Russia is increasingly difficult.

There is also growing international pressure on prime minister Narendra Modi to scale back India’s relationship with Russia but that is problematic on several levels, not the least of which are access to heavily discounted crude oil and that Moscow is a key defence partner.

For its part Moscow is keen to keep supplies flowing to India since Delhi represents a valuable (and steady) source of revenue for Putin as he looks to fund his military efforts in Ukraine.

With input from Bloomberg, Reuters