Indian Oil Corporation (IOC), the country’s largest oil company, has bought as many as 3 million barrels of crude that Russia had offered at a sharp discount to prevailing international tariffs, sources said.

The purchase, made through a trader, is the first since Russia’s February 24 invasion of Ukraine, which raised international pressure to isolate Putin’s government.

Sources aware of the matter said the IOC bought Ural crude for delivery in May at a discount of $20-25 a barrel to Brent to date.

When the US and other western countries imposed sanctions on Moscow, Russia has started offering oil and other commodities at discounted prices to India and other major importers.

IOC made the purchase under modified terms that oblige the seller to deliver it to the Indian coast in order to avoid complications that could trigger sanctions in arranging shipping and insurance.

Unlike the sanctions the US has imposed on Iran for its controversial nuclear program, oil and energy trade with Russia has not been banned. This means international payment systems are available to settle any purchase from Russia, they said.

This was not the case with Iran, which was cut off from the international money and security transfer system SWIFT. Also, companies or entities that invested or bought oil from Iran were sanctioned.

India, which imports 85 percent of its oil needs, wants to cut rising energy bills by buying at lower rates everywhere it can.

Oil Minister Hardeep Singh Puri told the Rajya Sabha on Monday that the country will evaluate Russia’s offer to sell crude oil at discounted prices, after considering aspects such as insurance and freight needed to fuel the non-traditional to get the supplier.

“Let me reiterate that in a situation such as that characterized by the pandemic of the past two years and in recent weeks by a war or a military action taking place between Russia and Ukraine, the government will examine all available options,” he said. said.

The minister said he has had discussions with Russian government officials.

“Talks are currently underway. There are several issues that need to be discussed, such as how much oil is available in Russia or in new markets or with new suppliers that may enter the market. There are also issues related to insurance, freight and many other matters, including payment arrangements,” he had stated.

New Delhi has historic diplomatic and defense relations with Moscow and has called for an end to violence in Ukraine, but does not condemn the invasion.

Many countries, including European countries, continue to rely heavily on fuel from Russia, the world’s second largest exporter of crude oil after Saudi Arabia.

India buys only 1.3 percent of all its oil needs from Russia.

His decision to use Russian oil at a discount will not violate any of the US sanctions against Moscow, the White House has said.

US President Joe Biden last week announced a ban on Russian oil and gas imports in connection with the country’s invasion of Ukraine, targeting the main artery of the Russian economy.

“Our message to every country remains that we abide by the sanctions we have imposed and recommended,” White House press secretary Jen Psaki told reporters at her daily news conference on Tuesday.

Asked about a media report about the possibility that India might accept Russia’s offer of discounted crude oil, Psaki said: “I don’t believe this violates that (sanctions).”

GlobalData, a leading data and analytics firm, said that given India’s neutral stance on the Russia-Ukraine conflict, Moscow’s supply of oil and other commodities at discounted prices will provide fiscal relief.

“India’s effort to diversify its import sources will reduce the financial burden on the government, reducing the risk of high import bills. In addition, cheaper crude could lower current production costs and help ease inflationary pressures,” said Gargi Rao. , economic research analyst at GlobalData.


This post Indian Oil buys 30 lakh barrels of crude oil that Russia offered at a huge discount was original published at “https://www.zeebiz.com/companies/news-indian-oil-buys-30-lakh-barrels-of-crude-oil-that-russia-offered-at-steep-discount-181062”

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