Reliance Industries Signs One-Year Deal with Rosneft to Buy Oil in Roubles amid Western Sanctions

Reliance Industries, India’s largest refining complex operator, has made a significant move by signing a one-year deal with Russia’s Rosneft to purchase at least 3 million barrels of oil per month in roubles. This decision comes as a result of Russian President Vladimir Putin’s efforts to find alternatives to the Western financial system for trade, especially in light of U.S. and European sanctions.

The deal with Rosneft not only allows Reliance to secure oil at discounted rates but also comes at a crucial time when the OPEC+ group is expected to extend voluntary supply cuts beyond June. The OPEC+ group, which includes OPEC and allies like Russia, is set to discuss output cuts in an online meeting on June 2.

India, being the world’s third-largest oil importer and consumer, has emerged as the biggest buyer of seaborne Russian crude since the West imposed sanctions on Moscow following the 2022 invasion of Ukraine. In the past, India has paid for Russian crude in various currencies like rupees, dirhams, and Chinese yuan.

State-owned Indian refiners have been resorting to spot markets for Russian oil due to the inability to finalize term supplies for this year. Rosneft emphasized the strategic partnership with India, highlighting collaborations in production, oil refining, and trading of oil and petroleum products.

Under the terms of the deal, Reliance will purchase Urals crude and low-sulfur crude oil from Russia at discounted rates and premiums, respectively. The payment for the oil will be made in roubles through India’s HDFC Bank and Russia’s Gazprombank.

This deal signifies a deepening partnership between India and Russia in the oil sector and showcases the evolving dynamics of global trade amidst geopolitical tensions. The move by Reliance Industries underscores the company’s strategic approach to securing essential resources while navigating complex international relations.