New Delhi: Despite Opec and its allies, including Russia, decision of cutting oil output by around 1.16 million barrels, Indian refiners would continue to get uninterrupted Russian crude oil at existing discounted rates.
India imports 85 per cent of its oil need and there would be no change in the buying patterns of refiners of the country after the announcement of cut in crude oil production.
“Indian refiners have been assured of uninterrupted crude supplies at the existing rates for now,” a report by Business Standard quoted Indian government officials as saying.
“There have been several reports of changes in India’s buying patterns after the global price cap took hold. But Indian refiners have continued benefiting from favourable purchase agreements,” a senior official said.
On Sunday (2 March), the Organization of the Petroleum Exporting Countries (OPEC), including Russia, agreed to widen oil production cuts to 3.66 million barrels per day (bdp) or 3.7 per cent of global demand.
Also Read: Oil’s Not Well: Why OPEC+ has cut oil production and how it could affect countries
Russia said it would extend an earlier voluntary production cut of 500,000 bpd until the end of 2023.
Russia largest crude oil supplier to India
For the sixth month in a row, Russia was the largest source of crude oil for India in March, supplying 35 per cent of all crude oil imports.
According to Vortexa, which tracks ship movements to estimate imports, India imported an all-time high of 1.64 million barrels per day (bpd) from Russia in March, up from 1.6 million bpd in February, 1.4 million bpd in January and 1 million in December.
India’s import of Russia crude oil is expected to increase in the coming months as both the countries have now agreed to settle trade in Indian rupee and Russian Ruble.
Also Read: Dollar Trumped: Russia wants all cross-border trade with India settled in rupee, ruble
Imports from Russia were slower before as Indian refiners found it difficult to pay in currencies other than the US dollar, as demanded by Russia after it was hit by international sanctions last year.
Earlier this week, several reports claimed that Opec+ announcement to cut oil output would reverse the softening in rates witnessed in crude oil basket that India imports. The Indian basket was ranging between $73-74 per barrel for most of the second half of March.
Why is Opec+ cutting oil output
As per a report by Reuters, Saudi Arabia said voluntary output cuts of 1.66 million bpd over and above the existing 2 million bpd cuts were made as a precautionary measure aimed at supporting market stability.
The Western banking crisis was one of the reasons behind the cut as well as “interference with market dynamics”, said Russian deputy prime minister Alexander Novak.
Also, fears of a fresh banking crisis have led investors to sell out of risk assets such as commodities with oil prices falling to near $70 per barrel from near an all-time high of $139 in March 2022.
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