Russian oil turns less sweet for Indian refiners

economictimes.indiatimes.com:

Russian oil due to slimmer discounts and payment troubles and increase their intake of crude from their traditional Gulf suppliers such as Iraq and the UAE, which are willing to offer increased credit periods, a petroleum ministry official said. The discount on Russian oil has now deeply eroded and so it doesn’t make sense to buy much from Russia, said the official, who didn’t want to be named. The official didn’t give details on the current level of discount.

Indian state refiners have never enjoyed discounts comparable to the ones reported by the assessment agencies as they take all Russian supplies on a delivered-at-port basis, which means the entire risk of logistics is with the suppliers. At their peak last year, discounts available to Indian state refiners were about $12-13 per barrel while the discounts quoted in the international markets were about $30-32/barrel. Discounts available to Indian refiners quickly fell to $6-7 per barrel.

Now they have further reduced. Urals, the flagship Russian crude, has now breached the G-7 price cap of $60, presenting another headache for refiners. Payment is an issue and state-run refiners will not be able to pay for Russian oil if prices stay above the cap, the official said.

And if they are not able to pay, it will hurt their credibility, the official said, adding that state refiners have taken only those Russian grades that traded below the price cap. Indian state refiners have paid in yuan, dirham and dollars for Russian oil but all these imports were priced below the cap. Iraq and the UAE are willing to offer longer credit periods and are closer to the Indian shores, the official said, arguing that it will make more sense to source more from these countries than Russia.