Indian Refiner Could Buy Russian Crude Priced Off Dubai Benchmark

India’s state-owned refiner Bharat Petroleum Corporation Limited (BPCL) is in advanced talks with Rosneft to buy nearly 44 million barrels of cheap Russian crude priced off the Dubai benchmark, Reuters reported on Friday, quoting sources with direct knowledge of the discussions.

The talks between BPCL and India’s now-top crude supplier, Russia, have progressed to an advanced stage with details including terms of payment being hashed out, according to Reuters’ sources.
The crude that Rosneft is expected to sell to BPCL would be priced at $8 a barrel below the Dubai benchmark, they added.
Rosneft is shifting to Middle East’s benchmarks and away from Europe-based Brent in its sales, as most of its crude is now being sold in Asia – predominantly China and India – compared to mostly European sales before the EU embargo on Russian oil imports. While both Brent and Dubai are priced in U.S. dollars, the Middle East benchmark is used by the top Middle Eastern producers for their crude selling to Asia, while Brent is the reference price for the crude from Europe, Africa, and South America.

Russia’s $8 a barrel discount to Dubai for the crude to India’s BPCL would be much lower than the price of the Saudi crude going to Asia in July. The flagship Saudi grade Arab Light is sold at a premium of $3.00 over the Oman/Dubai average after Saudi Arabia early this month raised the official selling price (OSP) for its crude to Asia.

The Rosneft-BPCL deal would see the Russian oil giant sending up to seven cargoes of around 700,000 barrels each until March 2024, Reuters’ sources said.
This deal would further boost Russia’s market share in India, where Russian crude oil accounted for 42% of all Indian crude imports in May. India’s Russian oil imports last month, at 1.96 million bpd, were higher than the 1.74 million bpd in India’s combined imports from the next four largest suppliers – Iraq, Saudi Arabia, the United Arab Emirates (UAE), and the U.S.