India’s top refiner launched a tender last week for the purchase of certain grades of crude for May and June loading. It issued an amendment on Monday to exclude certain varieties of high-sulphur crude, including Russian Urals, Das, Eugene Island and Thunder Horse, from the spot tender that closed. Tuesday, sources said.
The company did not give a reason for the exclusion of Russian and other qualities, but a source said not much to read. The exclusion is related to the requirement of the refiner, rather than a strategic cause, the source said.
Refiners choose a variety of grades based on their own ability to process crude, expected product demand and the cost of crude supply. Some varieties of rough are better suited for making certain products.
India has come under huge pressure from the United States to reduce its purchases of Russian oil, as the Biden administration sees it as financial support for the Russian invasion of Ukraine.
India’s purchase of Russian oil has always been small, between 1 and 2% of the country’s total needs, mainly due to higher freight. Buying has recently resumed due to the availability of Russian oil at very favorable prices.
The reduction has evaporated, a source said. Russian Urals are now available at a $2 discount to dated Brent, the same as in January, he said. In March, the discounts had deepened to $32 a barrel against Brent. This further erodes the attractiveness of Russian oil in the spot market.
India and Russia, however, are still engaged in government-level talks over crude supply under a forward deal Indian Oil Corp has struck with Russia’s Rosneft for 2 million tonnes a year. year. The payment mechanism for this is under development.