Indian Oil Corporation buys Russian crude at a $ 20- $ 25 discount: report

Indian Oil Corporation buys Russian crude at a $ 20- $ 25 discount: report

New Delhi:

The Indian Oil Corporation (IOC), the nation’s largest oil company, has bought a 3 million barrels of crude oil that Russia offered at a big discount in the face of international rates, sources said.

The purchase, through a trader, is the first to bring international pressure to isolate the administration of Russian President Vladimir Putin since Russia’s invasion of Ukraine on February 24th.

Sources familiar with the matter said the IOC bought the raw Urals for May delivery, with a $ 20-25 barrel discount with the Brent date.

As the United States and other Western nations imposed sanctions on Moscow, Russia began offering discounted oil and other products to India and other major importers.

The IOC purchased the amended terms and conditions that the seller must deliver to the Indian coast to avoid the complications that penalties can lead to in arranging shipping and insurance.

Unlike the sanctions imposed on Iran by the United States over its controversial nuclear program, its trade in oil and energy with Russia has not been banned. This means that international payment systems are available to settle any purchases made from Russia, they said.

That was not the case with Iran, which was cut off from the SWIFT international money and security transfer system. They also punished companies or entities that invested or bought Iranian oil.

India, which imports 85 per cent of its oil needs, is looking to reduce its energy bills by buying it from anywhere it can get it at cheaper prices.

On Monday, Oil Minister Hardeep Singh Puri told Rajya Sabha that the country would value Russia’s offer to sell crude oil at discounted prices after considering aspects such as insurance and goods needed to transport fuel from an unconventional supplier.

“I would like to reiterate that in the last two years the pandemic and the state of war or military action between Russia and Ukraine in recent weeks will allow the government to consider all possible options,” he said.

The minister said he had discussions with Russian government officials.

“Discussions are underway. A number of issues need to be considered, such as how much oil is available in Russia or in new markets or with new suppliers that may come to market. In addition, there are issues related to insurance, goods and other issues, including payment arrangements. .

New Delhi has a long history of diplomatic and defense relations with Moscow and has called for an end to violence in Ukraine, but the invasion has been rejected.

Many countries, including European nations, remain heavily dependent on Russian fuel, the second largest exporter of crude oil in the world after Saudi Arabia.

India buys only 1.3 percent of all oil needs from Russia.

Russia’s decision to take a discount on oil will not violate U.S. sanctions against Moscow, the White House has said.

U.S. President Joe Biden last week announced a ban on Russia’s oil and gas imports as a result of the country’s invasion of Ukraine, which is the main artery of the Russian economy.

“The message to any country continues to be imposed and we continue to meet the sanctions we have recommended,” White House press secretary Jen Psaki told reporters at his daily press conference on Tuesday.

Asked about a media report on the possibility that India could take off Russia’s discounted crude oil supply, Psaki said: “I don’t think this violates (the sanctions).” GlobalData, a leading data and analytics company, said that given India’s neutral stance on the Russia-Ukraine conflict, Moscow’s offer of oil and other products at discounted prices would provide relief in the fiscal realm.

“India’s efforts to diversify its import sources will tend to reduce the government’s financial burden and reduce the risk of large import bills. In addition, cheaper crude could reduce current production costs and help cool inflationary pressures,” he said. Gargik. Rao, Economic Research Analyst at GlobalData.

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