Russia Offers India Steep Discount on its Crude

Russia is offering India heavy discounts on the direct sale of oil as major buyers move away from its crude following the invasion of Ukraine, according to Bloomberg citing people familiar with the matter.

Sanction hit Russia is offering its flagship Urals grade to India at discounts for as much as $35 a barrel on prices before the war to our India, as reported by Bloomberg citing people familiar with the matter.

Brent prices climbed about $10 since then, implying an larger discount from current prices. Russia want India to take 15 million barrels contracted for this year to begin with.

India has been double down on Russian crude defying international pressure and sanctions. India and China have been key buyers of Russian crude since the war broke out.

The U.S. also warned India not to ramp up oil purchase from Russia, saying it had no objection to its purchases given they are bought a discount and are not in significantly higher volumes than previous years, Reuters reported citing an unidentified senior administration official.

The payment terms offered for the purchased would be in rupee-ruble pair using Russian messaging system SPFS, making the trade more attractive to India. However, no final decision has been taken and the matter will probably be discussed when Russian Foreign Minister Sergei Lavrov arrives in India for a two-day visit Thursday.

“India’s intake of Russian oil has been very small for many, many years,” said Vandana Hari, founder of oil market analysis provider Vanda Insights in Singapore, as reported by Bloomberg. “So the refineries are not configured to buy a lot of Russian oil.”

The two counterparts are exploring shipment of oil through  Russia’s Vladivostok Port in the far east to avoid shipping hurdles from the Baltic Sea in the west of the country. From there, oil shipments could reach India’s east coast refineries in fewer than 20 days.

Meanwhile, India is also eyeing seeking to push exports of medicines, engineering goods and chemicals to Russia  to narrow down trade gap by oil and arms purchases. 

Even though India condemned Moscow’s attack on Russia, it has maintained a softer tone against Russia’s actions.