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Russia offers discount oil to India as it refutes G7 price cap proposal

Moscow has told New Delhi that it is ready to offer oil to India at even lower prices than before, in response to growing calls among G7 countries to cap Russia’s oil prices. informed, officials said.

“The principle is that India should not support the G7 (G7) proposal. A decision on this issue will be taken after discussions with all partners,” said the Ministry of Foreign Affairs (MEA) relations. said the person.

These “substantial discounts” would be larger than those offered by Iraq in the past two months, officials said.

Russian crude prices were $16/bbl lower in May compared to India’s average basket of crude oil imports of $110/bbl. The discount was lowered to $14 a barrel in June, when the Indian crude basket was at $116 a barrel. As of August, Russian oil prices were $6 cheaper than the average basket of crude oil imports, officials said.

Iraq, India’s largest oil supplier, has underperformed Russia since late June by supplying a range of crudes that average $9 a barrel cheaper than Russian oil. Thus, a highly price sensitive market has retreated significantly in Iraq’s favor.

As a result, Russia slipped to third place on the list of countries that produce the majority of India’s oil, meeting 18.2% of the country’s total oil demand. Saudi Arabia (20.8%) and Iraq (20.6%) are the top two suppliers.

Even without the price debate, officials feel a steady supply of crude from outside the West Asian region should be established. “Oil imports from Iraq remain the mainstay of our purchases, but given the global complexity and the unstable domestic situation in Iraq, India needs to create an alternative mechanism,” said another official. Stated.

price cap push

The G7 countries, namely Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States, are currently pushing, along with the European Union, to cap Russia’s oil prices.

Western allies want to financially shut out Moscow, which has continued to benefit from high energy prices, and cut off the means of funding the invasion of Ukraine.

According to media reports, the oil cap plan will be implemented at the same time as the EU embargo comes into effect. He will set two price caps for crude oil and refined products. The crude oil cap will apply from 5 December 2022. For refined products, it will apply from 5 February 2023.

India is the world’s second largest oil importer and has repeatedly been called upon to participate in price caps. “Artificial changes to the established global price mechanism could have unintended consequences later on. India will continue to consider its options,” another official said.

Russian oil stays here

Russia’s share of crude oil imports, which was less than 1% of India’s crude oil imports before Russia’s invasion of Ukraine in February, rose to 8% in April, 14% in May and 18% in June. rose to According to industry estimates and official Commerce Department data.

India’s crude oil imports from Russia have declined since July. But overall imports of crude oil are also declining.

In August, India imported 7,38,024 barrels per day from Russia, down 18% from July, said Vortexa, a London-based commodity data analytics provider that tracks vessel movements to estimate imports. Estimates made by

Officials say India will continue to source from Russia until Russia continues to compete with other major producers on discounted prices.