The discount on oil from Russia is now very less
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According to sources, the cost of transportation from Russian ports to India is sitting at $11-19 per barrel. This is comparatively higher than the transportation charges from the Persian Gulf to Rotterdam. Russian oil was banned by European buyers and some countries in Asia like Japan after Russia’s invasion of Ukraine in February last year. Due to this, Russian Urals crude oil started trading at a much lower price than Brent crude oil i.e. the global benchmark price. However, the discount on Russian crude, which was $30 a barrel in the middle of last year, has now come down to $4 a barrel.
buy from russia
Indian refinery companies convert crude oil into fuels like petrol and diesel. Currently these companies are the biggest buyers of Russian oil. India has left China behind in this matter. China’s crude oil imports from Russia have come down significantly due to a slowing economy and large-scale electrification of vehicles. Indian refinery companies have increased their purchases very fast to establish their foothold on the cheap crude oil of Russia. Before the Ukraine war, Russia’s share in India’s total crude oil purchase was only 2 per cent, which has increased to 44 per cent today. But now the discount or concession on Russian crude oil has come down significantly.
This is because public sector Indian Oil Corporation (IOC), Hindustan Petroleum Corporation Ltd., Bharat Petroleum Corporation Ltd., Mangalore Refinery and Petrochemicals Ltd. and HPCL-Mittal Energy Ltd. along with private refinery companies such as Reliance Industries Ltd. and Nayara Energy Ltd. are in separate talks with the U.S. for crude oil deals. Sources said the discount could have been higher had the public sector units negotiated it together. At present, 20 lakh barrels of crude oil is coming from Russia every day. In this, the share of public sector units is about 60 percent.
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Russian Oil Vs Brent Crude
India used to buy 44,500 barrels of crude oil per day from Russia in the 12-month period ending February 2022, before Russia’s attack on Ukraine. During the last few months, India’s purchase of Russian crude via sea has crossed that of China. Sources said that Indian refinery companies buy crude oil from Russia on the basis of its supply. Due to this, Russia has to arrange for the transportation and insurance of oil. Although crude oil is being received from Russia at a price of less than $ 60 per barrel, but overall this amount is sitting at $ 70 to $ 75 per barrel. On Friday, Brent crude closed at $ 78.47, up $ 1.95.
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