Russia-India Oil Supply Deal

NEW DELHI/MOSCOW (Reuters) – Russia's state oil firm Rosneft has agreed to supply nearly 500,000 barrels per day (bpd) of crude to Indian private refiner Reliance in the biggest energy deal between the two countries, according to three sources familiar with the agreement.

The 10-year agreement accounts for 0.5% of global supply and is valued at roughly $13 billion annually at current prices. This deal solidifies energy relations between India and Russia, both of whom are facing heavy Western sanctions due to Russia’s invasion of Ukraine.

Rosneft did not respond to requests for comments. Reliance maintains that it engages with international suppliers, including those from Russia, and bases its deals on market conditions. Further comment on commercial matters was declined, citing the confidentiality of supply agreements.

The deal aligns with the anticipated visit of Russian President Vladimir Putin to India and follows statements by U.S. President-elect Donald Trump aiming to push Moscow and Kyiv towards peace in January.

Russian oil now comprises more than a third of India's energy imports. India has become the largest importer of Russian crude, overtaking the European Union, which imposed sanctions on Russian oil in response to the invasion.

Since India has not employed sanctions against Russian oil, refiners have benefitted from cheaper crude, which is priced at $3 to $4 less per barrel than rival grades.

The increasing imports of Russian oil by India come at the expense of Middle Eastern producers. The Reliance-Rosneft deal poses additional competition to rivals, including Saudi Arabia.

Competition among oil producers is fierce in the Indian market—one of the fastest-growing energy sectors—as growth in top importer China slows.

Under this agreement, Rosneft will deliver 20-21 Aframax-sized cargoes (80,000 to 100,000 metric tons) of various Russian crude grades and three cargoes of about 100,000 tons each of fuel oil monthly to Reliance's world-largest refining complex located at Jamnagar, Gujarat.

Sources stated that Reliance and Rosneft will assess pricing and volumes annually, reflecting the dynamics of oil markets. In 2024, Reliance had a prior agreement to purchase 3 million barrels of crude monthly from Rosneft, which regularly sells crude via intermediaries.

This new deal represents roughly half of Rosneft's seaborne oil exports from Russia, limiting the supply availability for other traders.

From January to October, Reliance imported an average 405,000 bpd of Russian oil, an increase from 388,500 bpd in the same timeframe the previous year, per tanker data.

The new deal was discussed and validated during a Rosneft board meeting in November, with supplies set to commence in January and extend for 10 years, with an option for a further extension of 10 years.

Pricing for the delivered grades will be based on differentials from the average Dubai price of the loading month. Premiums for light sweet grades are established at approximately $1.50 for ESPO, $2 for Sokol, and $1 for Siberian Light against Dubai quotes for 2025. The majority of this supply will be medium-sulphur and diesel-rich Russian Urals, favored by Indian refiners, priced at a $3 discount to Dubai quotes for the upcoming year.