Sources say that traders offer Russian oil for March delivery to India at a lower discount
After a temporary delay caused by the recent U.S. trade sanctions, which have increased trading costs, Indian sources in the refining industry said that traders have now resumed their offers to Indian refiners of Russian crude cargoes.
Washington imposed sanctions on Russian producers and tankers earlier this month, disrupting the supply of the world’s no. The number 2 oil producer in the world has been slowed down and ship availability is tightened.
India has become the biggest market for Russian oil shipped by sea, sold at a discounted price after Western nations stopped buying it as a response to Russia’s invasion of Ukraine 2022.
Sources said that while Russian crude is typically offered in the middle of the month, two months before the delivery period, only this week new trading entities began showing cargoes for delivery in March.
The number of cargoes available has also decreased, while the discounts on Urals crude have shrunk compared to last year. This is because freight rates have increased after Moscow began looking for vessels to replace sanctioned vessels.
One source said that the discounts on Russian Urals grade for delivery in March have been reduced to between $2.50 to $3 per barrel in Dubai, compared to deals of about $3.50 in December for volumes delivered during January and February.
The traders reported that the freight rates for Russian oil shipped from its Baltic ports to India rose to $6 million compared to $4.9 million prior to Jan. 10, when U.S. sanctioned were announced.
The freight rates for ESPO Blend oil shipments into India have increased three times since early January.
Anuj Jain said, “When new sanctions come, it takes time for the oil industry to stabilize,” during an analyst call held earlier this week.
He said that Russian crude is delivered in smaller vessels compared to middle east crude, which is transported in larger vessels.
Jain added that the company would only buy Russian oil if it was available at a reasonable discount.
Last week, India’s Oil Secretary Pankaj Jain said that tankers loaded up with Russian oil must discharge before February 27.
Indian refiners purchase Russian oil delivered, with the seller providing tankers, insurance and other services to ensure oil supply.
In order to avoid secondary sanctions, Indian refiners seek Russian supplies that involve tankers, insurers, and entities not sanctioned.
One of the buyers has said that since the sanctions of Jan. 10, he will be asking for additional documents, such as a certification of origin to prove the transactions were legal.
Sources also stated that banks were settling payments for Russian oil.
India has recently increased the number of Russian insurers available to its sellers, which helps them avoid the sanctioned Alfastrakhovanie & Ingosstrakh.
(source: Reuters)