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Saudi Arabia’s recent move to cut oil prices has caught India’s attention. Several Indian refiners have shown interest in buying crude oil from the Middle East’s top oil state. This appears to be at the expense of India’s oil imports from Russia.
Indian Oil Corp and Bharat Petroleum Corp, two Indian state-owned oil refiners, want to import more Saudi crude, insiders told Reuters. Both refineries are trying to buy an additional one million barrels per day from Saudi Arabia.
That’s because state oil company Saudi Aramco decided to cut prices for its Asian customers, sending the official selling price of Saudi Arabia’s main oil to its lowest level in more than two years.
India has been stocking up on Russian crude over the last year and a half, thanks to deep discounts Russia gave to friendly countries after its invasion of Ukraine. But imports of Russian oil from Indian refineries have recently fallen sharply. In December, India’s imports of Russian oil hit their lowest level in 11 months.
India prefers oil from Saudi Arabia over Russia
Sources told Reuters that the decline in Russian imports was due to recent payment problems with Russian oil suppliers. India did not want to pay for crude oil in Russian rubles and Russia did not want to pay for its oil in Indian rupees.
Alternatively, India wanted to pay for Russian oil in dirhams, the currency of the United Arab Emirates (UAE). But Russian oil company Rosneft has failed to open a bank account in the United Arab Emirates, meaning it cannot accept payments in that currency.
The dispute led to Russian oil ships carrying 5 million barrels of oil floating off the coast of India for about a month, ship log data showed, Bloomberg news agency reported.
India also appears to be under pressure from the US, with which it wants to maintain good relations. The US has imposed trade restrictions against Russia because of the war in Ukraine. A Russian oil ship has been floating off the coasts of India and Sri Lanka for more than a month.
However, India denies that there are payment problems with Russia. The decline in oil purchases from Russia could simply be due to better oil prices from other suppliers, India’s energy minister said last week, without specifying which suppliers were offering better prices.
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