India still prefers Russian oil despite rising prices – Kommersant
India will remain a major buyer of Russian oil even as the discount on the country’s flagship Urals blend shrinks, the Kommersant business daily reported on Friday.
Russian oil will maintain its competitive advantages on the Indian market despite the Urals discount to Brent shrinking to $4–5 per barrel, the paper said, citing data from energy analytics company Kpler.
India’s consumption of Russian crude has soared since last year, ousting traditional Middle Eastern suppliers Saudi Arabia and Iraq from the top spots. Discounts offered by Moscow have also enabled India to become a major exporter of oil and petroleum products.
In March, Russia’s largest oil producer, Rosneft, signed an agreement with Indian Oil Corp, the country’s top refiner, to substantially increase supplies and diversify oil grades delivered to the country. Moscow and New Delhi also agreed to use the Asia-focused Dubai oil price benchmark in their latest deal, abandoning the Europe-focused Brent benchmark.
In May, Russia accounted for 46% of India’s total oil imports, compared to less than 2% imported prior to the Ukraine conflict.
Western nations have widely criticized New Delhi for buying cheap Russian fuel. In May, the EU’s chief diplomat Josep Borrell urged the bloc to crack down on India re-exporting refined Russian oil into the EU.
Meanwhile, the executive director of India’s top oil company ONGC believes purchases of Russian crude are good for India and the global economy.
“By importing from Russia, India also has helped the global economy in the sense that [we] freed up some oil on the Gulf for other countries to source, particularly Europe. So it was kind of a win-win situation,” K.C. Ramesh said at the annual APPEC energy conference in Singapore on Wednesday.
Rising global crude prices, driven by Russia and Saudi Arabia’s production and export cuts, have squeezed the discount on Russian crude, prompting some Indian officials to claim that the country would decrease its reliance on barrels from Moscow in favor of Middle Eastern suppliers. However, even the cheapest Saudi Arab Heavy grade costs $7.5 per barrel more than Urals, while Iraqi Basrah Medium oil costs $7 more per barrel. The Saudi standard Arab Light blend, which is similar to Urals, costs $10 more, figures showed.
Russian crude shipments to India have slipped from their record highs in the past few weeks largely due to a seasonal fall in demand and maintenance outages. However, experts are predicting a rebound to follow.
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