Indian oil refining corporation Reliance Industries has signed a record 10-year contract with Russia's Rosneft to supply oil worth $13 billion annually.
Points of attention
- India's Reliance Industries signed a 10-year contract with Russia's Rosneft for $13 billion worth of oil annually, increasing purchases by 23%.
- Indian refineries play a crucial role in assisting Russia to evade Western sanctions on oil sales by processing Russian oil and exporting petroleum products to Western countries.
- The surge in Russian oil exports to India and China reshapes the global oil market dynamics, with Chinese and Indian oil traders contributing to the rise of 'shadow fleet' tankers.
- With India set to receive about 20-21 tankers of crude oil and three tankers of fuel oil monthly, the agreement solidifies India's position as a key player in the global oil trade with Russia.
- The pricing of the oil purchases will be linked to the average Dubai oil price, showing the strategic nature of the deal between India and Russia in the evolving oil market landscape.
What is known about the record contract for the purchase of oil between India and Russia
It is noted that the Indian corporation will thus increase purchases of Russian oil by 23%.
In particular, we are talking about deliveries of almost 500,000 barrels of oil per day, which is 0.5% of all world consumption and half of Rosneft's sea exports.
Under the terms of the new contract, starting next year, Reliance will receive about 20-21 Aframax tankers of 80,000-100,000 tons of oil and three tankers of 100,000 tons of fuel oil each month.
Deliveries will be made to the world's largest oil refining complex Reliance in the state of Gujarat. The price will be tied to the average price of oil in Dubai.
From January to October 2024, Reliance imported an average of 405,000 barrels of Russian oil per day. The new agreement provides for an increase in supplies of approximately 23% against current imports.
In 2024, Reliance had an agreement with Rosneft to purchase 3 million barrels of oil per month, and the company regularly bought oil through intermediaries.
How Indian refineries help Russia circumvent Western sanctions on oil sales
Indian oil refineries have gone to full capacity processing Russian oil, oil products from which are sold to Western countries despite sanctions.
After the start of the Kremlin's full-scale war against Ukraine, the aggressor country increased the export of its own crude oil by 900%.
So, only during 2023, Russian oil supplies increased to 82 million tons compared to 4.5 million tons in 2021.
It is emphasized that this is due to the sending of Russian crude oil for processing to India, from where finished petroleum products are exported to EU countries.
Russian oil supplies to China also increased by a third — from 80 million tons in 2021 to 107 million tons in 2023.
As a result, 78% of Russian oil exports went to China and India, while in 2021 their share was 32%.
Thus, Chinese and Indian oil traders are responsible for the rapid increase in the number of "shadow fleet" tankers.
