Despite US concerns, India is ramping up its purchases of Russian crude oil, buying up every major grade from the OPEC+ supplier as the battle in Ukraine enters its third month.
According to Indian refinery officials and dealers, state-run oil refineries are increasingly looking at privately negotiated deals instead of buying through public auctions to secure better costs. India has bought everything from flagship Urals that sail from western ports to a rare shipment of ESPO from the Far East, which China usually prefers.
India has a long-standing relationship with Russia, which includes military purchases and oil purchases that help the Kremlin meet financial penalties.
President Joe Biden told Prime Minister Narendra Modi last week that the US was willing to assist India in diversifying its energy imports, but some are self-sanctioning Russian oil, making it cheap and appealing.
The two leaders met after Biden’s senior economic adviser made more direct remarks earlier this month, saying that the US has warned India against aligning itself with Russia. The battle has fueled inflation and pushed oil prices above $100 per barrel.
According to Bloomberg data, India has purchased millions of barrels of Urals crude on the spot market since the end of February, including an ESPO cargo currently en route to Sikka in the country’s west.
The Far East grade is uncommon among the nation’s refiners because it is transported in smaller ships and voyages are rather long, making it less cost effective.
State-run refineries have also purchased Sokol, a major crude from Russia’s Far East. So far this month, Indian oil refiners have not purchased any Russian grades through public tenders, and private transactions are expected to be enticing since purchasers missed out on hefty discounts for identical cargoes being offered in Europe.
For eager purchasers, Russian oil may become much cheaper. The European Union is experiencing increasing pressure to cut imports, while Chinese crude demand is being stifled by a return of Covid-19, which has resulted in a series of lockdowns around the country.
Russian imports have already been banned in the United States and the United Kingdom.