India seeks more discounts in its Russian oil imports at less than $70 per barrel: Reports

As India continues to purchase crude oil from Russia at steep discounts offered by Moscow in the grip of punitive sanctions on the Vladimir Putin-led nation, recent reports suggest that New Delhi is seeking to obtain deeper concessions on Russian oil. India is seeking to buy oil cargoes at less than USD 70 per barrel. 

It is pertinent to mention here that India remains one of the biggest importers of crude oil and is among the few buyers of Russian oil amid the Kremlin-led war on Ukraine. India purchases over 80% of its oil.

The bold bargain may work in favour of India as the jolt to the Russian oil industry in the year 2022 may force its produce to plummet by 17% this year as per some estimates. 

As per a top source, government-affiliated organisations and oil processors will be the beneficiary of the discounted price in any potential agreement between New Delhi and Moscow. Also, the offer is more likely to materialise during the summer as Russian entities would aim to deliver oil to India, both from the West via the Baltic Sea and via the route from the Russian far east region that becomes more accessible during the said season, the source added. 

At the outset of the Russia-led war on Ukraine and amid incessant sanctions delinking Moscow, Putin's regime stood deprived of access to several international currency markets. This led to the scope of payment mechanisms in local currencies emerging as a viable alternative to increase bilateral trade.

GoI's Rupee-Ruble mechanism amid sanctions on Russia

The Indian government actively considered the Rupee-Ruble mechanism as a contingency plan to carry out business with its strategic partner. The dedicated payment system would enable India to operate existing trade obligations with Russia bypassing the crippling penalties imposed by the West and dealing in US dollars.

Indicating substantive progress, in March, the Reserve Bank of India (RBI) reportedly met with officials from three Russian financial institutions including VTB, Sberbank, and Gazprombank to discuss the potential Rupee-Ruble deal.

The Rupee-Ruble arrangement is an alternative to settling dues and carrying out payments instead of Dollars or Euros and the idea was first conceived in 1953 under the Indo-Soviet agreement.