Discounts on Russian crude offered to Indian refineries have increased in the past 10 days, potentially encouraging refiners to buy cargoes despite a trade deal with the United States.
Points of attention
- Russia has increased discounts on crude oil for Indian refineries, reaching record levels in the past 10 days.
- India is being prompted to choose more favorable offers over a trade deal with the US, as import tariffs could potentially be reduced in exchange for halting imports of Russian oil.
Russia lures India with oil discounts
This was reported to Bloomberg on condition of anonymity by traders participating in the purchases.
According to traders, the main Russian oil grade Urals is being offered at a discount of more than $10 per barrel compared to the price of Brent oil, taking into account transportation and other costs.
Analyst firm Argus estimates the discount at around $11 per barrel, and according to its data, the figure was $9.15 per barrel by January 22. Discounts may vary depending on payment terms.
US President Donald Trump announced on Monday that the US would reduce import tariffs on Indian goods in exchange for India halting imports of Russian oil. Indian Prime Minister Narendra Modi confirmed the deal but did not comment specifically on the oil issue, prompting refiners to suspend purchases and await clarification from New Delhi.
According to Kpler, India's purchases of Russian oil have declined in recent months, but still averaged about 1.2 million barrels per day in January, compared to a peak of 2 million barrels per day.
Meanwhile, on February 4, while commenting in parliament on the US-India trade agreement, Indian Commerce Minister Piyush Goyal said that his country seeks to diversify its energy sources, but did not specifically mention refusing to purchase from any country.
Meeting the energy needs of 1.4 billion Indians is our priority. Given the changing global circumstances, diversifying energy sources is part of that strategy.
According to Reuters, the government has not required Indian refiners to stop purchasing Russian oil, and they will need some time to complete purchases already underway.
