Indian refiners may be able to source most of their Russian oil purchases at a rate lower than the West’s price cap of $60 after international prices fell.
India hasn’t backed the price cap and may yet end up paying lower rates since Russia can’t defy the market or reduce discounts to sell at rates higher than the cap, Indian industry executives said. The flagship Urals crude, which made up 80% of India’s Russian oil imports in November, is trading at around $49 per barrel while ESPO blend and Sokol are trading at around $62 and $69 per barrel, respectively.
Multiple government officials and industry executives said domestic refineries will continue to buy cheap Russian oil with no major shipping or insurance trouble expected as the market rate for the key grade has fallen below the cap. The US and its allies have barred the use of its shipping, insurance and financial services for any Russian oil deal struck above the cap of $60.
“The price cap looks more like a posturing. Even the West may not want Russian oil to go off the market,” said MK Surana, the CEO of Ratnagiri Refinery and Petrochemicals and former chairman of HPCL.