India’s largest private corporation Reliance Industries and the Russian company Rosneft have signed a one-year contract for monthly supplies of up to three million barrels of oil that will be paid for in rubles, Reuters reported on Tuesday, citing sources familiar with the issue.
Reliance Industries will reportedly buy two shipments of Urals crude, with the option to purchase four more each month at a discount of $3 per barrel to the Middle East Dubai benchmark. The operator of the world’s biggest refining complex, located in Jamnagar, is also expected to buy up to two shipments per month of low-sulfur crude oil at a premium of $1 per barrel to Dubai quotes, the source specified.
The Mumbai-based multinational has agreed to pay for the supplies using Russian rubles; India’s HDFC Bank and Russia’s Gazprombank will facilitate transactions, the sources told the agency.
India, the world’s third-largest oil consumer, has become a major importer of Russian crude oil since Western buyers opted to reduce purchases in response to Ukraine-related sanctions. Russian exporters began offering substantial discounts on crude to attract new markets following the loss of the country’s prior trade partners.
Since the beginning of Moscow’s military operation in Ukraine, the EU, G7, and their allies have imposed numerous sanctions on Russia in an attempt to curb the country’s oil revenues, including an embargo and a $60-per-barrel price cap on Russian crude. Similar restrictions have been introduced for exports of petroleum products.
Earlier this month, India’s state-controlled Bank of Baroda reported that the country’s imports of Russian oil soared tenfold in 2023, adding that the South Asian nation saved nearly $5 billion by boosting purchases of crude from Russia. The sanction-hit country became India’s largest supplier during the fiscal year 2023/24 for the second year in a row, outranking Iraq, Saudi Arabia, and the United Arab Emirates.
Moscow’s shift away from the US dollar towards local currencies, including the ruble, Indian rupee, Chinese yuan and UAE dirham, in cross-border settlements with its partners follows Russia’s push to find alternative ways to facilitate trade amid the West’s attempts to cut off the nation’s access to its financial system.