Page 12 - FSUOGM Week 37 2022

FSUOGM POLICY FSUOGM

Russia offers India deeper oil discount to

dissuade it from backing price cap

INDIA IN an effort to keep India out of the West's pro- after oil prices fell below $100 again.
posed oil price cap scheme, Russia has offered Iraq is now India’s biggest supplier after it
India has ramped up Delhi deeper discounts on oil deals, Business undercut Russia by reducing the cost of a barrel
shipments of oil from Standard reported on September 11. to $9 less than Russia was charging. As a result,
Russia since the war Russian exports to India have exploded this Russia fell into third place, supplying 18.2% of all
started. year, rising from about 1% of total imports in the country's oil needs, versus Saudi Arabia with
2021 to around 18% in August as Indian refin- 20.8% and Iraq with 20.6%.
eries have rushed to take advantage of cheap Even before talk of the oil price cap scheme
Russian crude. started, Russia began talks on the discount level
India is the second-biggest importer of oil in to maintain market share, but after the US and
the world, but Russia was already facing compe- other G7 countries began to put pressure on
tition from Iraq and Kingdom of Saudi Arabia Delhi to join the coming sanctions on Russian
(KSA), India’s two other suppliers of crude. And oil, the Indian position to ask for deeper dis-
in the last month Russian imports of crude to counts has been improved. And the Kremlin
India have slowed as Iraq offered a deeper dis- is prepared to cut prices further to maintain its
count as the discount on Urals compared to the revenues from India, Business Standard reports,
benchmark Brent blend has narrowed. citing Indian officials, which have not committed
In the first two months of the war in Ukraine to the scheme.
the discount on the Urals blend blew out to $35, "Any artificial changes to the established
but as export and production in Russia recov- global price mechanism may have unintended
ered as it successfully re-oriented exports from consequences later. India will continue to weigh
Europe to Asia that discount has narrowed its options," an Indian official said.
rapidly. In August, India imported 738,024 barrels
In May the discount fell to $16 a barrel against per day (bpd) from Russia, 18% lower than in
the average price of $110 India was paying for July, show estimates made by London-based
oil. The discount fell further to $14 in June while commodity data analytics provider Vortexa,
India’s basket price for oil rose to $116. And in which tracks ship movements to estimate
August the discount was squeezed again to $6 imports. ™

P12 www. NEWSBASE .com Week 37 15•September•2022