India is trying to increase its Russian oil imports, with state-owned refiners willing to take more steeply discounted supplies from Rosneft PJSC while international players refuse to do business with Moscow because of its invasion of Ukraine.

According to persons familiar with the companies’ procurement plans, state processors are working together to finalise and secure fresh 6-month supply contracts for Russian crude to India, reported Bloomberg. Cargoes are being solicited from Rosneft on a delivered basis, with the seller handling shipping and insurance, the sources claimed.

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According to the Bloomberg report, if these supply arrangements are reached, they will be in addition to the supplies that India now receives from Russia under previous agreements. Volumes and pricing are now being negotiated, with Indian banks poised to fully finance all shipments, according to persons who asked not to be named since the conversations are private. As prominent international dealers such as Glencore Plc wind down their deals, Indian refiners would increasingly purchase straight from Russian enterprises such as Rosneft, they noted.

Indian Oil Corp, Hindustan Petroleum, and Bharat Petroleum are state refiners, while Reliance Industries and Nayara Energy, which is partially controlled by Rosneft, are private processors. Procurement actions for both public and private companies are carried out independently. When approached by Bloomberg, representatives from the three main state-owned enterprises were unable to comment immediately.

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Both state-owned and privately-owned facilities in India have increased their purchases of Russian oil as the United States, United Kingdom, and European Union imposed sanctions and trade restrictions, causing most customers to flee and offer levels to plummet. Last month, a record volume of Russian crude was being shipped to India and China as European purchasers rushed for substitutes and looked as far as the United Arab Emirates for options. The resulting panic and rerouting of global oil flows has boosted oil by more than 20% since Russia invaded Ukraine in late February.

Refiners in Asia’s second-largest oil buyer have seen increased profits from converting cheap crude into fuels supplied both locally and on the export market to clients in Europe and the United States. Russian crude is just one component of India’s overall crude oil feedstock basket, which also includes long-term and spot imports from the Middle East and Africa.

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The possible increase in Russian crude purchases will certainly weigh on the South Asian country’s spot imports, according to the people. According to Bloomberg projections based on trade data, India purchased more than 40 million barrels of Russian oil between late February and early May, which is around 20% more than total flows for 2021. According to Kpler data, Russian oil arrivals into India in May were 740,000 barrels per day, up from 284,000 barrels in April and 34,000 barrels a year earlier.

Whilst India’s imports of Russian crude are neither unlawful or in violation of any sanctions, the Biden government and the EU have pressed the country to avoid conducting trade with Moscow in order to cut off the Kremlin’s access to oil earnings and money. The Asian country has reaffirmed that its Russian imports are insignificant in comparison to European purchases, accounting for only a small portion of the country’s overall consumption.

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Cheap Russian oil has brought some comfort to India, which imports more than 85 percent of its oil, just as inflation and food and fuel prices continue to rise. Access to inexpensive crude is already increasing India’s oil imports, which increased nearly 16 percent year on year in April. According to oil ministry data, the Eurasian region’s proportion of oil, which includes Russia, increased to 10.6 percent in April from 3.3 percent the previous year.