World
Russia Shifts To Dubai Benchmark For New Indian Oil Deal In Move Away From Europe And Towards Asia — Report
An Indian Oil petrol pump (Pic via Twitter)
Russia's Rosneft and the Indian Oil Corporation have agreed to use the Dubai oil price benchmark for their latest deal to deliver Russian oil to India, according to three sources who spoke to Reuters.
Rosneft is Russia's largest oil producer and Indian Oil Corp is India's top refiner.
The two state companies have decided to move away from the Europe-dominated Brent benchmark, and towards Asia, after Europe began its boycott of Russian oil over the Russia-Ukraine war.
Both the Dubai and Brent benchmarks are in dollars. However, Brent is used largely by European oil majors and traders, whereas Dubai relies heavily on Asian and Middle Eastern oil trading.
Rosneft chief executive Igor Sechin had said in February that due to the increasing purchases of Russian oil by Asia after the imposition of export sanctions by the West, the price of Russian oil will now be determined by the Asian market instead of Europe.
Two sources told Reuters that Rosneft will nearly double their oil sales to Indian Oil Corp under the new deal announced on 29 March.
Russian Deputy Prime Minister Alexander Novak had recently said there was a 22-fold increase in oil sales to India last year, but the exact volume sold was unclear.
Sources revealed that Rosneft plans to sell 1.5 million tonnes of oil (11 million barrels) every month, with optional quantities, to Indian Oil Corp from 1 April.
India's refiner had a contract to purchase 3 million barrels of Urals crude in 2022-23. The deal allowed for doubling the quantity every month at varying differentials to dated Brent on a delivered basis, according to the Reuters report.
According to sources, the new agreement encompasses the sale of Urals crude coming in from European ports, as well as Sokol oil transported from Sakhalin, to be traded at a discount of $8-10 per barrel to Dubai quotes on a delivered basis.
India has become the largest buyer of seaborne crude from Russia. The larger volumes and change in Russian oil pricing highlight closer ties between Moscow and Delhi.
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