Russia’s state-owned oil company, Rosneft, has reached a landmark deal to supply nearly 500,000 barrels of crude oil per day to India’s Reliance Industries. This agreement marks the largest oil supply contract between the two nations, according to a Reuters report on Thursday.
The 10-year deal, valued at approximately $13 billion annually based on current prices, includes the delivery of 20 to 21 Aframax-sized cargoes each month, totaling between 80,000 and 100,000 metric tons of various Russian crude grades. Additionally, Rosneft will send three monthly cargoes of fuel oil, each weighing around 100,000 tons.
India’s increasing demand for Russian energy commodities has been driven by ongoing instability in the Middle East. In July, India overtook China to become the world’s largest importer of Russian oil. According to trade and industry data, India imported 2.07 million barrels per day (bpd) of Russian crude in July, reflecting a 4.2% month-on-month and 12% year-on-year increase. This surpassed China’s oil imports for the same month, which totaled 1.76 million bpd, based on Chinese customs data.
Since Western countries imposed sanctions on Russian energy exports following its invasion of Ukraine, Indian refiners have been purchasing Russian crude at a discount to Brent crude prices. In July, India’s purchase of Russian ESPO Blend crude surged to 188,000 bpd, utilizing larger Suezmax vessels. While northeastern Chinese refiners have traditionally been the largest buyers of ESPO crude due to their proximity to Russia, they are now purchasing less due to sluggish fuel demand.
“India’s need for Russian oil will continue to grow unless further sanctions are imposed,” an Indian refining source told Reuters.
In addition to securing Russian oil, India is also seeking to diversify its energy sources for greater security. Last month, Prime Minister Narendra Modi emphasized the importance of Guyana to India’s energy strategy during a visit to the country. Modi stated that he views Guyana as a key energy partner and encouraged Indian businesses to invest there.
While India has not yet secured any specific deals with Guyana, External Affairs Minister Jaideep Mazumdar indicated that discussions are ongoing. He highlighted that such agreements would provide greater predictability for India’s energy supply.
Related Topics:
- CNPC: China’s Oil Demand May Reach Its Peak by 2025
- Unexpected Crude Oil Build Drives Prices Up
- Oil Giants Make Big Bets on Deepwater Expansion