NEW DELHI: The steep discounts on Russia crude oil that India gorged on since the Ukraine war, have plunged but the shipping rates charged by Russia-arranged entities continues to remain ‘’opaque” and higher than normal, sources said.
Russia bills Indian refiners at a price shade less than the $60 per barrel price cap imposed by the West, but charges anything between $11 and $19 per barrel, twice the normal rate, for delivery from the Baltic and Black Sea to the west coast, three sources with knowledge of the matter said.
The $11-19 per barrel shipping costs from the Russian ports to India – some of it on the 100+ tankers reportedly acquired by Russian actors for a shadow fleet – are higher than rates for comparable distances, such as a voyage from the Persian Gulf to Rotterdam.
Following Moscow’s invasion of Ukraine last February, Russian oil was sanctioned and shunned by European buyers and some in Asia, such as Japan. This led to Russian Urals crude being traded at a discount to Brent crude (the global benchmark).
The discount on Russian Urals grade has, however, narrowed from levels of around $30 a barrel in the middle of last year to closer to $4 per barrel, sources said.
Indian refiners, who convert crude oil extracted from below ground into finished products, such as petrol and diesel, are now the biggest buyers of Russian oil as Chinese imports have maxed out due to a massive electrification of vehicles and demand issues in a shaky economy.