New Delhi is allegedly in negotiations with Moscow to procure oil shipments at a discounted rate, Reuters reported on Wednesday citing an unnamed senior Indian government official.
“We will get cheap oil from Russia,” the anonymous source told Reuters on May 25, adding that India’s government “has not finalised terms of the discount.”
“With concerns that conventional payment routes could be blocked due to Western sanctions on Moscow, including on banks, work was ongoing to set up a rupee-rouble trade mechanism to facilitate transactions,” the source revealed.
“Without elaborating further, the official added that no final decision had been taken and all possible ways to pay for goods were still under discussion,” Reuters reported.
India, which is the world’s third-largest oil importer, currently buys crude oil at an average price of above $100 a barrel. Bloomberg reported on May 4 that New Delhi was seeking Russian oil cargoes “at less than $70 a barrel on a delivered basis to compensate for additional hurdles such as securing financing for purchases.”
“India is trying to get deeper discounts on Russian oil to compensate for the risk of dealing with the OPEC+ producer as other buyers turn away, according to people with knowledge of the matter,” Bloomberg revealed at the time.
“OPEC+” stands for the “Organization of the Petroleum Exporting Countries Plus.” Investopedia describes the group as “a loosely affiliated entity consisting of the 13 OPEC members and 10 of the world’s major non-OPEC oil-exporting nations. OPEC+ aims to regulate the supply of oil in order to set the price on the world market.”
India’s government is one of a few nations that have continued to import oil from Russia since a wave of financial sanctions came crashing down on Moscow’s economy in late February, severely disrupting Russian business transactions. The U.S. government led the ongoing sanctions campaign against Russia in an effort to punish the country for its latest war with Ukraine, which began on February 24.
Reuters reported on May 25 that Russia’s oil exports had not fallen to date despite the Western sanctions against Moscow. Some international traders have avoided purchasing Russian oil since late February, however, due to the sanctions’ secondary effects, which include disruptions to payment systems and shipping procedures.
“Flows of Russian oil to India aren’t sanctioned, but tightening international restrictions in areas such as marine insurance and pressure on New Delhi from the US are making the trade more difficult. Prime Minister Narendra Modi has so far resisted Western encouragement to scale back its relationship with Moscow because of the opportunity to get heavily discounted oil,” Bloomberg observed on May 4.
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