Reliance Industries Limited (RIL) signed a one year agreement with Russia’s Rosneft to purchase at least three million barrels of oil per month, paying in roubles. The transition to rouble payments aligns with Russian President Vladimir Putin’s initiative for Moscow and its trade partners to develop alternatives to the Western financial system.
The agreement enables Reliance to secure oil at discounted prices, which is particularly beneficial as the OPEC+ group of oil producers is likely to extend voluntary supply cuts beyond June. OPEC+, which includes the Organization of the Petroleum Exporting Countries (OPEC) and allies such as Russia, is set to discuss these cuts in an online meeting scheduled on June 2.
India, the world’s third-largest oil importer and consumer, has emerged as the largest buyer of Russian seaborne crude following Western sanctions and a halt in purchases due to Russia’s 2022 invasion of Ukraine.
India has previously paid for Russian crude using rupees, dirhams, and Chinese yuan. Refiners have been sourcing Russian oil from spot markets as they were unable to secure long-term supply agreements for this year.
Rosneft has stated that its method for determining the value of sold crude is consistent across all companies, whether private or state-controlled. According to the deal, Reliance will acquire two cargoes of approximately one million barrels of Urals crude each month.
Additionally, there is an option to purchase up to four more cargoes each month at a discount of $3 per barrel to the Middle East Dubai benchmark. As reported by India Today, Reliance will also buy one to two cargoes per month of low-sulphur crude oil, primarily the ESPO blend from Russia’s Pacific port of Kozmino, at a premium of $1 per barrel to Dubai quotes.
