Indian refiners betting big on Russian oil

New Delhi: After Indian Oil Corporation (IOC), Hindustan Petroleum Corporation Ltd (HPCL) has bought two million barrels of Russian crude oil as Indian refiners stepped up efforts to secure Russian oil available at deep discounts.

Just like IOC, HPCL also bought Russian Urals crude through European trader Vitol, sources with knowledge of the development said. Separately, Mangalore Refinery and Petrochemicals Ltd (MRPL) has floated a tender seeking one million barrels of similar crude oil. Western sanctions on Russia over its invasion of Ukraine have prompted many companies and countries to shun its oil. This has led to Russian crude being available in the market at deep discounts. To capture the opportunity, Indian refiners are floating tenders to buy such discounted oil. The tenders are mostly won by traders, who would have stocked inventories of the cheap Russian oil.

The sources said IOC, the nation's top oil firm, late last week bought three million barrels of Urals through Vitol for May delivery at a discount of $20-25 a barrel to dated Brent. HPCL this week made the rare purchase of two million barrels of Urals crude for loading in May, they said. Meanwhile, Reliance Industries Ltd, operator of the world's biggest refining complex, may avoid buying Russian fuel as it has a huge exposure in the US and the sanctions against Moscow may impact its business. Since 2020, IOC has had a term or fixed volume deal to buy crude oil from Russia's Rosneft. But, it rarely imported volumes under the term deal as the cost of transporting the oil from Russia made it uneconomical. But, with discounts of $20-25 per barrel have turned the tide in favour of Russian crude and Indian refiners are lapping it up, the sources said.