Indian companies sometimes face delays in paying for Russian oil above the limit set by Western countries ($60 per barrel). According to RBC with reference to Reuters, this was stated by Indian Oil Minister Pankaj Jain.
He explained that “nobody is preventing India from buying Russian oil at a price exceeding the established limit level.” In the event that the price of Russian oil is above the “price ceiling”, companies independently look for alternative settlement mechanisms. However, the minister noted that most of the deliveries of Russian oil to India are carried out at a price below the limit.
In April, Bloomberg reported that Indian banks were advising refiners not to buy Russian oil at more than a price ceiling imposed by Western countries. The State Bank of India and the Bank of Baroda have informed local refineries that they will not make payments for oil purchased above the limit.
In the past, India rarely bought Russian oil because of the high cost of freight. But after the refusal of Western countries from Russian oil, the situation changed. Russia has overtaken Iraq for the first time in the past year to become India’s largest oil supplier, while Saudi Arabia has fallen to third place, Reuters writes.
Cheap oil from Russia began to replace the Middle East. The share of OPEC countries in India’s oil imports in March 2023 fell to a 22-year low: 59% instead of 72% in 2021. The share of oil from Russia reaches 23%.
In an attempt to support prices for oil that is getting cheaper, the OPEC + countries decided to cut production in May, but, according to analysts, this decision may be unprofitable for the Middle East members of the alliance. “Russian oil is already cheaper than similar Middle Eastern grades and it looks like OPEC is hurting itself by cutting production,” said Refinitiv analyst Ehsan Ul Haq. According to him, the planned reduction in production has raised world oil prices and at the same time reduced discounts on Russian raw materials in relation to the benchmark brands Brent and Dubai.
Source: Rosbalt
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