February 09, 2024 [Oil price]- India’s state oil refiners are negotiating term deliveries from Russia’s Rosneft of about 500,000 barrels per day (bpd) of crude, sources with knowledge of the discussions told Bloomberg on Friday.

Talks, however, have been dragging on for weeks as India’s giant state refiners Indian Oil Corporation, Bharat Petroleum, and Hindustan Petroleum demand clauses that would protect them in case issues with payments delay crude cargo deliveries, according to Bloomberg’s sources.

Indian refiners, which have become key buyers of Russian crude after the Western sanctions on Russia’s crude and oil product exports, are seeking term deals to move away from having to source Russian crude on the spot market, where competition for Moscow’s cheap oil in Asia is growing.

The tougher enforcement of the G7 sanctions and related payment issues have been holding up Indian purchases of some cargoes of Russian crude oil, with tankers previously headed to India turning back eastwards, tanker-tracking data monitored by Bloomberg showed early this year.

Supply of Russia’s Sokol grade to India seems to be particularly hit by the tougher sanction enforcement.

In January, India’s crude imports from Russia slipped for a second consecutive month and were at their lowest level in a year, according to tanker-tracking data reported by Reuters.

Russia continues to be India’s top crude supplier, but deliveries to India fell by 4.2% from December to 1.3 million barrels per day (bpd) in January, per data from LSEG cited by Reuters. Vortexa pegs India’s crude imports from Russia at 1.2 million bpd last month, down by 9% month-on-month.

Stricter sanctions enforcement, narrowing discounts of Russian grades, and spiking freight rates due to the threats to shipping in the Red Sea have weighed on India’s crude purchases and imports of Russia’s oil in recent weeks.

This week, India’s Minister of Petroleum and Natural Gas Hardeep Singh Puri told CNBC that “The world is grateful to India for buying Russian oil.”

“If we start buying more of the Middle Eastern oil, the oil price will not be at $75 or $76. It will be $150,” Puri said.

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