India wants Russian crude oil for less than $70/barrel: Report
What's the story
In the light of extremely harsh Western economic sanctions against Russia for its invasion of Ukraine, India is reportedly persuading Moscow to provide further discounts on crude oil. India wants to pay below $70/barrel to compensate for its risks in trading with the OPEC+ producer. Discounts are being sought to make up for difficulties like obtaining financing for purchases due to the Western sanctions.
Context
Why does this story matter?
Following its invasion of Ukraine on February 24, Russia became the most sanctioned country after Iran and North Korea. However, Indian oil companies currently have no restrictions and have been buying Russian oil at $70/barrel since last month. Russia has offered deep discounts to India on crude oil and other commodities since it lost its own market due to Western sanctions amid the war.
India-Russia
India bought over 40M barrels of discounted Russian oil
Global benchmark Brent is currently trading near $108/barrel, down from a record-high of nearly $130/barrel in the early days of the war. Since the Russia-Ukraine war started, Indian refiners, both public and private, have purchased more than 40 million barrels of discounted Russian crude, according to Bloomberg. Last month, Russia provided India with a discount on a fixed one-time sale of 15 million barrels.
Fact
Indian oil imports from Russia increased by 20%
According to Bloomberg estimations (based on Commerce and Industry Ministry data), total purchases since the war are substantial in quantity—20% more than Moscow-Delhi flows in 2021. This also drew sharp criticism from the West, including the US and the European Union. However, India defended its decision by pointing out that Europe purchases more from Russia, adding India encourages competitive offers to meet domestic demand.
Oil
Oil prices skyrocketed due to Russia-Ukraine crisis
It may be noted that oil prices across the globe have skyrocketed due to the conflict between Russia and Ukraine, over fears of supply restraints. In the initial days of Russia's invasion of Ukraine, global crude oil prices had risen multifold, with benchmark Brent crude reaching multi-year highs of near $140 per barrel at one point.
Context
Why is India buying oil from Russia amid war?
India has long-standing diplomatic and defense ties with Moscow, and it has refrained from openly condemning Russia's Ukraine invasion so far. India is also heavily dependent on oil imports for nearly 80% of its energy requirements and therefore is purchasing it from Russia to avoid a further surge in oil prices. India has also said American oil imports would rise by 11% in 2022.