Discounts offered on Russian crude oil double in 2 months
Expanding discounts have boosted imports, increasing Russian oil’s share in India’s overall crude imports to 38% in September from 33% in August. Imports of Russian oil by state-run refiners surged a quarter in September after falling 30% in August. State refiners account for two-thirds of Russian imports. State refiners are taking Russian oil almost entirely from non-Russian entities to extract better discounts and avoid payment troubles, said the people.
These suppliers are mainly resourceful traders with the ability to source oil from Russia and safely deliver to Indian ports without worrying about sanctions or logistics constraints. Almost all purchases of Russian oil by state refiners are being made in the spot market. Russian oil accounts for about half the total crude purchases by Bharat Petroleum Corporation and a third of crude sourced by Indian Oil Corporation and Hindustan Petroleum Corporation, the people said.
State refiners are paying for Russian oil using US dollars and UAE Dirham based on the suppliers’ preference, said the people. But payments in Chinese Yuan have stopped after the government conveyed its displeasure to refiners regarding this, they said. China aims to internationalise its currency and its use for oil payments can greatly help that cause. Indian refiners are able to pay for Russian oil despite buying it at rates much higher than the price cap of $60 per barrel set by the G7 countries, said people in the know. Those tasked with implementing the provisions of G7 sanctions understand that restricting Russian flows can lead to a much bigger oil price surge, something not even the G7 countries want, an industry executive said. Brent, the international crude benchmark, has gained about $15 per barrel in four months to $90 per barrel. A further increase can add to the inflation the central banks in the developed world have been struggling to tame for more than a year.
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