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<\/p>\nIndia will soon meet Iraq and the United Arab Emirates (UAE) to seek a definitive rate of discount on crude oil similar to what Russia has provided so far, sources said.<\/p>\n
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Multiple officials and industry executives said Iraq, which is India’s biggest oil supplier, wants to discuss the level of discounts expected by Indian refiners.<\/p>\n
India’s focus on snapping up ever-increasing volumes of Russian crude oil has led to a corresponding decline in imports from the Middle East.<\/p>\n
Flows from Iraq, Saudi Arabia, and the UAE have suffered as a result.<\/p>\n
Meanwhile, the price of Russian Urals grade crude is trading close to the $60 limit, beyond which sanctions take hold.<\/p>\n
Since April, the majority of Russian oil sold to India has been on the Dubai benchmark, with an average discount level of $8-10 per barrel.<\/p>\n
Indian oil-marketing companies are keen to avoid purchasing beyond that limit, an IOCL official said.<\/p>\n
Sellers ready for discounts<\/strong><\/p>\n Last year, Baghdad undercut Russia in June by supplying a range of crudes that, on average, cost $9 a barrel less than Russian oil.<\/p>\n The extremely price-sensitive market, therefore, shifted heavily back in favour of Iraq.<\/p>\n The trend continued till the G7 nations imposed a $60 per barrel price cap on Russian crude on December 5, 2022.<\/p>\n This was implemented concurrently with a separate ban on Russian seaborne crude shipments by EU nations.<\/p>\n Pushed into a corner, Moscow had offered more competitive prices to retain a steady flow of crude to new buyers like India and China in a bid to make up for the lost volumes that were earlier going to Europe.<\/p>\n That trend has continued since.<\/p>\n Industry insiders said Moscow won’t change terms by a wide margin at a time when it is pressed for cash.<\/p>\n But the level of discounts has continuously shrunk in 2023 as China has snapped up larger volumes of Russian crude.<\/p>\n In July, oil imports from Russia stood at 1.92 million barrels per day (bpd), down from a record high of 2.12 million bpd in June.<\/p>\n It remained the single-largest supplier of crude oil for the 10th straight month as of February, estimates made by London-based commodity data analytics provider Vortexa, which tracks ship movements to estimate imports, show.<\/p>\n But officials say India remains confident that Russia will continue to compete with other major producers in offering discounts, which remained at an average of $4 per barrel in July.<\/p>\n Need to expand crude basket<\/strong><\/p>\n Even without the price argument, officials feel a stable supply of crude oil should be established from outside the West Asian region.<\/p>\n “While oil imports from Iraq have remained a mainstay of our purchases, given global complications and Iraq’s volatile internal situation, India needs to create alternative mechanisms,” another official said.<\/p>\n The series of Basrah crude export grades originating in Iraq are attractive for upgraded Indian refineries.<\/p>\n They are also of great value for production of items, such as diesel.<\/p>\n As part of a long planned overhaul of its crude grades, Iraq has over the past year increased the availability of Basrah Medium and Basrah Heavy — relatively cheaper than Basrah Light — that are suited for India’s upgraded plants.<\/p>\n Meanwhile, crude imports from the UAE touched a record high of $16.8 billion in 2022-23 (FY23), up from $12.3 billion in the previous year.<\/p>\n But this made the Emirates only the fourth-largest source of crude for India in FY23, knocked down one spot from FY22 due to the emergence of Russian Urals grade crude in the Indian market.<\/p>\n Last month, the Reserve Bank of India and the Central Bank of the United Arab Emirates signed a pact to settle trade in local currency.<\/p>\n This enables the use of the rupee and the UAE’s dirham for cross-border transactions.<\/p>\n