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Saudi Oil Price Cuts Help Fill Void for India As Russian Imports Plunge

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  • Saudi Arabia’s recent oil price cuts are luring some Indian refiners to snap up crude from the kingdom.
  • That comes as Russian crude exports to India plummet, hitting an 11-month low in December.
  • Russian imports have collapsed because better discounts can be found elsewhere, India’s oil chief said.

Saudi Arabia’s recent move to slash the price of its oil has attracted attention from India, with some refiners now interested in buying crude from the kingdom while oil purchases from Russia plummet.

Indian Oil Corp and Bharat Petroleum Corp, two state-run Indian oil refineries, are now looking to ramp up their purchases of Saudi crude, people familiar with the matter told Reuters on Tuesday. Both refineries are seeking to purchase an extra 1 million barrels a day from Saudi Arabia, the sources added.

That comes as Saudi Aramco has decided to slash prices for its Asian customers, with February’s official selling price of its flagship oil blend falling to its cheapest level in over two years.

India has been gorging on Russian crude over the last few years, thanks to hefty discounts Russia has offered to friendly nations since beginning its invasion of Ukraine. But purchases by India’s refiners have recently stumbled, with crude imports from Russia plunging to an 11-month low in December. 

Sources told Reuters that the fall stemmed from payment issues with Russian oil suppliers, as India is seeking to pay for crude in dirhams, the currency of the United Arab Emirates.

But a unit of Russia’s Rosneft hasn’t been able to open a bank account in the UAE, making it unable to accept payment in the currency. The dispute appeared to cause five Russian oil ships to float around the shores of India for about a month before turning around and heading eastward, Bloomberg ship-tracking data previously showed.

India also appears under pressure to maintain good ties with the US, which has slapped Russia with trade restrictions since Moscow went to war in Ukraine. A Russian oil ship sanctioned by the US has been floating around the shores of India and Sri Lanka for over a month as officials mull over whether to let it land, Bloomberg reported.

India though, has denied any payment struggle with Russia. Oil purchases from the nation have dropped off simply because there are better discounts on crude available from other suppliers, India’s oil chief said last week, without specifying which suppliers were offering better discounts.

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