Home / Oil & Energy / Oil & Companies News / Russian Urals crude discounts shrink sharply, says India refinery exec

Russian Urals crude discounts shrink sharply, says India refinery exec

Discounts on the sale of Russian Urals crude have shrunk significantly from the $36/barrel seen soon after the Russia-Ukraine conflict, said an official from Indian refiner Bharat Petroleum Corp, indicating that Moscow is regaining pricing leverage in a tight energy market.

The discounts on Urals sold on a free-on-board basis have reduced to the “teens,” Amit Bilolikar, deputy general manager for crude trading, said on the sidelines of the 38th Annual Asia Pacific Petroleum Conference (APPEC).

India, which rarely used to buy Russian oil, has emerged as Moscow’s second-largest oil customer after China since Moscow’s invasion of Ukraine in late February.

Refiners in India, the world’s third-biggest oil importer and consumer, have been snapping up nearly all grades of Russian crude, taking advantage of discounts after some buyers in the West halted purchases.

However, Indian refiners this month are set to skip loading of Russia’s ESPO oil as higher freight rates have made the crude costlier, sources told Reuters earlier this month.

India has said that Russian oil purchases are driven by economic considerations as the authorities try to rein in inflation.

Bilolikar also said BPCL’s purchases of U.S. oil has been rising steadily, replacing West African and Mediterranean crude.

The discount between U.S. crude futures to Brent , rising to more than $7 a barrel, has made it economically feasible for India to import American oil.

“U.S. crude oil prices are very dynamic and U.S. (oil) industry is very resilient. Quality wise they are a good replacement for our refineries,” he said. The government-controlled refiner was taking mostly lighter grades such as Midland, he added.

To cut Russia’s oil revenue, the Group of Seven nations, led by the United States, plan to impose a price cap on Russian exports.

Bilolikar said there was no clarity yet on the planned price cap mechanism.

“But one thing is very clear. We do all the due diligence and we follow all the international laws. If there are no sanctions on trade of Russian oil, we’ll definitely continue purchasing,” he said, as securing cheaper supplies are a priority for India.
Source: Reuters (Writing by Nidhi Verma; Editing by Jacqueline Wong)

Recent Videos

Hellenic Shipping News Worldwide Online Daily Newspaper on Hellenic and International Shipping