All major Western countries, including the US, have imposed sanctions on Russia for the attack on Ukraine. Meanwhile, Russian oil companies have given attractive offers to India. Russian oil companies are offering oil to India at huge discounts. But India is currently being advised not to take this offer. In view of Russia's attack on Ukraine, America and European countries have imposed many types of sanctions on Russia. Troubled by sanctions, Russian oil companies are offering India huge discounts on oil.
According to a Business Standard report, Russian oil companies are offering India a discount of up to 25-27 percent on the price of crude. Several Russian banks have been removed from the international banking system SWIFT banking system over the attack on Ukraine, making it difficult for Russia to do business with other countries. The Russian government is engaged in building a new payment system to get out of this situation. If this happens, then only Russia's oil trade with India will be able to increase. India buys a large quantity of crude oil from Russia's largest state-owned oil company Rosneft.
In December last year, when Russian President Vladimir Putin visited India, Rosneft and India Oil Corporation signed a contract to supply up to 20 million tonnes of oil to India through Novorossiysk port by the end of 2022. India is dependent on the Middle East for oil purchases, but it is moving towards increasing oil purchases from countries like America and Russia to diversify its imports.According to a report in Business Standard, sources have said that Russian oil companies are offering 25-27 percent discount on the old prices of Brent crude oil. Hinting at huge discounts by Russian companies, a source said, "The offer is attractive.
However, there is still no indication as to how the oil purchase will be paid for. However, it is also being said that India should be very cautious before starting trade with Russia amid sanctions. Buying oil from Ukraine in the midst of Russia's ongoing attack may anger many countries as they may also see it as providing financial aid to Russia. A chief executive of a private bank told Business Standard, “It is Russia's problem that they are not able to sell their products. Due to the war, crude oil prices have increased from $90 a barrel to $115 a barrel, forcing India to pay more for oil purchases. We should also find alternatives other than Russia for oil imports. According to a Bloomberg report, just before the imposition of sanctions, the price of Russian crude oil had gone down by 11.60 barrels.
Despite this, Russia's crude oil did not bid because Russia's oil could not find a buyer in view of possible sanctions on Russia.Many Russian banks have been removed from the SWIFT banking system, due to which it has become difficult for other countries of the world to do business with Russia. The Government of India and the Reserve Bank of India are exploring alternative avenues to pay for their imports from Russia. India is talking to banks and companies to find a way out about this. Banks have suggested an option of activating the Rupee-Ruble trading account to trade in the currency of India and Russia for trading with Russia. However, no final decision has been taken on this yet. India's trade with Russia is low but the impact of sanctions on India too However, India imports crude oil in small quantities from Russia. India buys 70 percent of its use from OPEC countries.
The war is not going to cause any direct damage to India's business, but indirectly, the war is going to have a lot of impact on India.According to global financial services company Nomura, India's trade with Russia, Ukraine and Belarus is not much. These countries account for 1 percent of India's total exports and 2.1 percent of total imports. But sanctions on Russia will have an effect on India as well. If the prices of fuels like crude oil, coal etc. increase, then it will have an effect on India too and the prices will increase in the country. In a message to its customers, Nomura said, "The government is identifying alternative supply sources for both edible oils and fertilisers, however, these would be costly." Discussions are also going on on the rupee-ruble trade payment system to avoid hindrance in business.