Why Russia turned to Dubai landmark in India oil deal | World news
Russia’s biggest oil producer Rosneft and India’s top refiner Indian Oil Corp agreed to use Dubai’s Asia-focused oil pricing platform in their new deal to deliver Russian oil to India, three sources familiar with the deal said. .
The decision by two government agencies to abandon the European-dominated Brent benchmark is part of a shift in Russian oil sales to Asia after Europe shunned Russian oil following Russia’s invasion of Ukraine over a year ago.
Both benchmarks are denominated in dollars and set by S&P Platts, a unit of US-based S&P Global Inc, but Brent is mostly used by European oil professionals and traders, while Dubai is heavily influenced by the Asian and Central Asian oil trade. East.
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Rosneft CEO Igor Sechin said in February that the price of Russian oil will be determined outside of Europe as Asia has emerged as the biggest buyer of Russian oil since the West imposed progressive sanctions on exports.
Under the new agreement, announced on March 29, Rosneft will almost double oil sales to Indian Oil Corp, two of the sources told Reuters.
The IOC and Rosneft did not immediately respond to Reuters emails seeking comment on the details of the deal, which has not been previously reported.
Russian Deputy Prime Minister Alexander Novak said on Tuesday that Russian oil sales to India jumped 22-fold last year, but did not specify the volume sold.
Rosneft will sell up to 1.5 million tonnes (11 million barrels) each month, including some optional quantities, to IOC in the new fiscal year from April 1, the two sources said.
They said that in 2022/23, the IOC has an agreement to buy 3 million barrels of Urals grade with an option to double the amount every month at a price in differences to dated Brent on a delivery basis.
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The new contract includes Urals crude, shipped from Russia’s European ports of Primorsk, Ust-Luga and Novorossiysk, and offshore Sokol oil from Sakhalin which will be sold at a discount of $8-$10 per barrel to Dubai quotes on a posted basis, three sources. tell.
The large levels and volatility in the price of Russian oil show the close relations between Moscow and India, which has become the largest buyer of crude oil from Russia.
Indian refiners rarely bought Russian oil in the past due to high freight costs compared with Europe, but after Urals prices fell to historic levels Russia has now replaced Iraq as the top oil exporter to India in a matter of months. back, data from business sources show.
Russia has been shifting its energy supplies from traditional markets in Europe to Asia, particularly India and China, since the West imposed wide-ranging sanctions, including a ban on imports of Russian oil.
European Union countries stopped buying Russian oil from December 5 and the Group of Seven countries (G7) joined the EU in imposing a price on Russian crude oil of $60 per barrel. The move aims to cut Russia’s oil revenue while maintaining stability on the global oil market.
India was the largest buyer of Russia’s Urals crude oil in March. Deliveries to India are set to account for more than 50% of all Urals marine exports last month, with China in second place.
China, which buys Russian Urals at prices compared to either dated Brent or ICE Brent, doubled purchases of Urals oil in the first half of February compared to the same period in January, according to dealers and Refinitiv Eikon data.
