Russia shifts to Dubai benchmark in India oil deal

Russia shifts to Dubai benchmark in India oil deal

Rosneft, a leading Russian oil producer, and Indian Oil Corp, a top Asian refiner, have agreed to move away from the Europe-dominated Brent benchmark and use instead the Dubai oil-price benchmark, marking a strategic shift that will have long-term ramifications on international oil trade.

Rosneft plans to sell 11 million barrels every month, with optional quantities, to Indian Oil Corp from April. The oil will be sold on Dubai benchmark quotes and discounted to around $8-$10 per barrel. India’s refiner had a contract to purchase 3 million barrels of Urals crude in 2022-23.

The new contract includes Urals crude, shipped from Russia’s European ports of Primorsk, Ust-Luga and Novorossiysk, and Sokol oil exported from Sakhalin.

The larger volumes and change in Russian oil pricing highlight closer ties between Moscow and New Delhi, which has now become the largest buyer of seaborne crude from Russia.

India was the biggest buyer of Russia’s benchmark Urals grade crude in March. Deliveries to India are set to account for more than 50 per cent of all seaborne Urals exports. last month, with China in second place.

The surprise move by the two state companies to abandon the standard Brent benchmark, a long-set European standard, also assumes significance in the