India and Russia sign largest oil supply deal

Russian state oil company “Rosneft” and Indian private oil refiner Reliance have signed the largest energy deal for oil supplies for 10 years.

This was reported by Reuters, citing three sources familiar with the situation.

Deliveries will begin in January next year — Russia will supply the Indian company with almost 500 000 barrels of crude oil per day.

Thus, “Rosneft” will deliver 20-21 Aframax-sized cargoes (from 80 000 to 100 000 metric tons) of various grades of crude oil and three cargoes of about 100 000 tons of fuel oil each month.

Such a 10-year deal represents 0.5% of global supplies and is worth approximately $13 billion per year at todayʼs prices.

The new deal accounts for about half of “Rosneft” seaborne oil exports from Russian ports, which doesnʼt leave much supply for other traders and intermediaries.

Reuters sources say Reliance and “Rosneft” will review prices and volumes annually. After 10 years, the deal could be extended for another 10 years.

“Rosneft” did not comment on the situation. At the same time, Indian company Reliance said that it works with international suppliers, including Russia, and all deals are based on market conditions. But the company declined to comment further on commercial issues, citing the confidentiality of supply agreements.

Russian oil accounts for more than a third of Indiaʼs energy imports, Reuters reports. India became the largest importer of Russian oil after the European Union imposed sanctions on Russian oil imports following its full-scale invasion of Ukraine.

Sanctions have made Russian oil cheaper than other suppliers by $3-4 per barrel. India has not imposed sanctions against Russia.

At the same time, prices for some grades of Russian oil will be higher than the average oil price in the region (the price of oil from Dubai is used as a benchmark).

But still, the bulk of the supplies will be Russian Urals with a medium sulfur content and diesel fuel, which is the most popular among Indian refiners and will be sold at a discount of $3 per barrel to the Dubai quote for next year.

Middle Eastern oil producers are competing for the Indian market, which is one of the fastest-growing energy markets. This deal between India and Russia will be another challenge for them, especially for Saudi Arabia.

• Reliance signed a deal with “Rosneft” to purchase 3 million barrels of oil per month in 2024. The Russian company also regularly sold Reliance oil through intermediaries.
• From January to October, Reliance imported an average of 405 000 barrels per day of Russian oil, up from 388 500 barrels per day in the same period last year.

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