Reliance Industries, India’s largest refiner, signed a one-year deal with Russia’s Rosneft to purchase at least 3 million barrels of crude oil per month. Notably, the agreement stipulates payment in Roubles, the Russian currency. The discounted Russian oil is estimated to have saved India billions of dollars on its import bill.
Reliance Industries Limited (RIL) is runs the world’s largest refining complex in India. They have recently made a deal with Russia’s Rosneft to buy at least 3 million barrels of oil every month for the next year. The payment of Russian oil will be made in Russian roubles.
According to sources, Reliance will purchase two cargoes of about one million barrels of Urals crude oil each month. They will also have an option to buy four more, at a discount of $3 per barrel compared to the Middle East Dubai benchmark.
After the Russia-Ukraine war, Western countries stopped buying Russian oil. So Russia began selling more oil to India and China at lower prices. Reliance, owned by billionaire Mukesh Ambani, has two large refineries with a total capacity of about 1.4 million barrels per day.
Reliance will also buy 1-2 cargoes of low-sulfur crude oil each month from Russia’s Pacific port of Kozmino at a premium of $1 per barrel. India’s HDFC Bank and Russia’s Gazprombank will handle payments using roubles.
This deal is most probably to help Reliance get oil at cheaper rates. Especially as the OPEC+ group of oil producers might extend their supply cuts beyond June. OPEC+ will discuss these cuts in a meeting on June 2.
Last year, the discounts on Russian crude were between $8 and $10 per barrel. However, this year they have dropped to around $3 to $5 per barrel.
Rating agency ICRA said that buying discounted Russian oil saved India $5.1 billion in the fiscal year 2023 and $7.9 billion in the first 11 months of the current fiscal year.
The Indian government wanted to buy Russian oil using Indian currency. But this did not work out because Russian sellers and banks preferred not to trade in rupees. Stay with us to learn more about the developing story!
