State-owned oil marketing companies (OMCs) are set to procure crude oil from Russia at a discount, according to sources at OMCs as prices remain elevated due to the Russia-Ukraine conflict.
The White House has also said a move by India to procure crude from Russia would not be a violation of its sanctions on Moscow, but added countries should think about where they stand regarding Russia’s invasion of Ukraine.
Despite a fall in oil prices over the past week, price of Brent crude has risen around 29 per cent since the beginning of the year, amid concerns about stable supply of oil and gas.
“The state-owned OMCs will be procuring from Russia for varying levels of their requirements, based on whatever they can process at their refineries,” said a source, adding the government had given the nod to procurement of Russian crude.
The official said the discount on offer made Russian crude a relatively attractive proposition. While India imports about 80 per cent of its crude oil requirements, only 2-3 per cent of crude imports are currently sourced from Russia. The move would come at a time when OMCs have been absorbing losses on marketing petrol and diesel, according to experts, as they have held rates constant for over four months despite a sharp increase in prices.
OMCs, which ordinarily revise fuel prices on a daily basis based on benchmark international prices, halted price revisions on November 4 when the Centre’s excise duty hikes were put in place and have maintained prices at the same levels through elections in Uttar Pradesh, Punjab, Uttarakhand, Goa and Manipur.
“I don’t believe this would be violating that (sanctions),” said White house press secretary Jen Psaki, when asked about reports that India was looking to procure discounted crude oil from Russia.
Psaki did, however, ask that countries think about where they want to stand in the current conflict, adding that “ support for the Russian leadership is support for an invasion that obviously is having a devastating impact.”
Russian cargoes of crude are currently facing issues finding buyers as traders are concerned about potentially violating sanctions. Major players are concerned about reputational damage from procuring Russian crude. Last week, global oil major Shell apologised for procuring Russian crude amid the ongoing Ukraine conflict and committed to halting all spot purchases of Russian crude and shut its service stations, aviation fuels and lubricants operations in Russia.
The US and Europe have imposed a slew of sanctions on Russia, including removing several Russian banks from the SWIFT messaging system, which plays a key role in international financial transactions. The US has banned all energy imports from Russia as well as new energy investments in Russia.