"Chinese demand has maxed out and Europe is not buying any seaborne crude from Russia. So India remains the only destination with increasing appetite. And if they (refiners) negotiated together, bigger discounts could have been extracted," a source said.
Consider this, IOC is the only company to have entered into a term or fixed volume deal. Other refiners continue to buy on a tender basis.
AdvertisementBefore Russia's invasion of Ukraine in February last year, India was a minor importer of Russian crude, with purchases of about 44,500 barrels per day (bpd) in the 12 months to February 2022.
India's purchases of seaborne crude from Russia have surpassed those by China a couple of months back. Sources said Indian refiners buy crude oil from Russia on a delivered basis, putting the onus on Moscow to arrange for shipping and insurance.
While the invoicing for oil is at or a shade less than USD 60 per barrel, the shipping and insurance rate billed is as per quotes Russia gets from three not-so-well-known agencies which cannot be independently evaluated and remain opaque, they said.
The actual sale price of Urals crude is about USD 70-75 per barrel, channelling a large portion of Russian oil revenues to the three shadow agencies, they said.
The G7 imposed a USD 60 per barrel price cap on Russian oil beginning December 2022 to try to limit Moscow's ability to finance its war in Ukraine.
The price cap meant that companies based in coalition countries to continue providing maritime services for the transport of oil only if that oil is sold at or below the price cap level. Companies based in coalition countries have historically accounted for around 90 per cent of the market for relevant maritime insurance products and reinsurance.
So to get ships and insurance, Russia prices oil in the invoice at USD 60 or less and bills the buyers for shipping and insurance based on quotes it gets from the three agencies, sources said.
Until 2022, the Baltic Exchange, a London shipping industry clearinghouse, was quoting two standardised indicators, TD6 and TD17, serving as benchmarks for shipping costs.
But since late 2022, Russian crude is no longer sold in Rotterdam and Augusta and Baltic Exchange has stopped listing TD17 and has modified the TD6 indicator, so it is not necessarily applicable to Russian cargoes.
Also, additional tankers are booked on a time charter basis, which also makes the cost of a single voyage non-transparent. These tankers are not booked through Baltic Exchange shipping brokers, so a dearth of information on the actual costs, they added.
The proportion of Russian oil-loaded ships insured in the EU, G7 or Norway was 46.3 per cent in May compared to 78 per cent in February last year. These countries also continue to provide tankers to ship Russian oil.
More than 28 per cent of oil tankers that moved Russian oil came from the EU, G7 or Norway in May 2023, down from 58 per cent in the pre-war era. UAE-registered tankers make up 37 per cent (13.4 per cent in pre-war era) and 12.3 per cent come from China including Hong Kong. Origin of the remaining 22 per cent is not known.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
