Trade deal has been announced between America and India. At the same time, the American President is not shying away from saying that India has said not to buy Russian oil and will adopt Venezuelan oil. On the other hand, India has clearly stated that it will not buy oil from countries where there is a ban. The US President had imposed an additional tariff of 25 percent against India on purchasing Russian oil. Which has been removed with this trade deal. But Russia is as important for India as America. Amidst the India-US deal, Russia has also thrown the trap of extra discount on India. So that the supply of Russian oil from India continues unabated. The special thing is that this discount has come to more than 10 dollars per barrel in comparison to the market rate. Let us also tell you what kind of news has come out regarding Russian oil discount.
$11 discount
Discounts on Russian oil offered to Indian refineries have increased significantly in the last 10 days, raising questions about whether processors will be incentivized to increase oil purchases despite the US trade deal, which is based on lower purchases. Traders involved in the purchase, on condition of anonymity, said that Russia’s main Urals grade oil is being sold at a huge discount compared to Brent grade. The figure is more than $10 per barrel, which also includes shipping and other costs. According to market analysis firm Argus, India is expected to get a discount of $ 11 per barrel compared to Russian oil Brent crude oil. As of January 22, this figure was $9.15. The current discount is at least three times higher than the discount quoted by traders before US sanctions last October. Discounts may vary depending on payment terms.
What does Kepler’s report say?
President Donald Trump announced on Monday that the US will reduce import duties on Indian goods in exchange for India stopping taking Russian oil. Prime Minister Narendra Modi confirmed the agreement, but did not make any clear comment on crude oil or other details, due to which oil refiners stopped purchases and sought clarification from the government. India, which has not traditionally been a big buyer of Russian oil, turned to Russian oil in early 2022 due to relaxations following the invasion of Ukraine. Purchases have declined slightly in recent months, but averaged about 1.2 million barrels per day in January, according to Kpler, compared with a peak of 2 million barrels per day.
Kepler said in a note on Tuesday that it is not possible for India to completely separate itself from Russian oil in the near future. According to the data intelligence firm, imports are expected to remain stable at about 1.1 million to 1.3 million barrels per day through the first quarter and the beginning of the next quarter. According to Kpler estimates, India is getting a discount of about $9 per barrel from the Urals compared to ICE Brent, which is about $4 to 5 cheaper than the Venezuelan barrel.
Now what will be India’s next step?
From here a question begins that what will be India’s next step? The US President has maintained that he has received assurance from India to eliminate Russian oil. India has also assured that oil will be purchased from Venezuela. In such a situation, India, which has been an old friend of Russia, is continuously meeting its needs cheaply by buying Russian oil. Will leave him. Or India will ignore the deal made with America for cheap Russian oil. Let us tell you that India remains in bilateral trade deficit with Russia. India’s trade with America has been in surplus.