In light of Western sanctions on Moscow, India's commitment to its now-largest oil supplier would be strengthened by the agreement, which would also signal Rosneft's continued shift away from Brent, which is dominated by Europe, and toward the Middle Eastern benchmark used in Asia.
According to the sources, who requested anonymity because they were not authorized to speak with the media, Rosneft would deliver Bharat Petroleum Corp. Ltd. (BPCL) the equivalent of six to seven cargoes containing approximately 700,000 to 720,000 barrels each month through March 2024.
According to the sources, negotiations for a contract are in advanced stages, with both parties working out specifics like payment terms.
Rosneft and BPCL did not respond to inquiries for clarification.
The board of BPCL is required to approve the deal, which would increase the proportion of Russian oil going to the third-largest oil importer in the world.
After diverting supplies away from Europe, Russia has taken over as India's top oil supplier, accounting for 40% of the market.
Due to the high costs of transport, Indian refiners have been reluctant to purchase Russian oil in the past. However, as a result of the Russian invasion of Ukraine, some Western nations have shunned purchases from Moscow.
Beginning on December 5, nations that are members of the European Union (EU) stopped purchasing oil from Russia, and the Group of Seven (G7) nations, along with the EU, imposed a $60-per-barrel price limit on Russian crude in an effort to reduce revenues for Moscow.
According to the sources, the price of Russian crude that would be sold to BPCL would be $8 less than the Dubai benchmark.
According to sources, India's largest refiner, Indian Oil Corp., agreed in April to purchase up to 1.5 million metric tons of oil per month from Rosneft at a discount of $8 to $10 per barrel compared to the Middle Eastern benchmark.
Rosneft has been gradually moving away from the Brent benchmark, which is dominated by Europe. This is due to the fact that Asian oil sales have surpassed European purchases of Russian oil.
S&P Global Platts, a division of S&P Global Inc. based in the United States, sets both benchmarks in dollars. The Dubai benchmark is heavily influenced by oil trading in Asia and the Middle East, whereas Brent is mostly used to price crude from Europe, Africa, and South America.
Since the West imposed extensive sanctions, including an embargo on seaborne Russian oil imports, Russia has been redirecting its energy supplies from traditional markets in Europe to Asia, primarily India and China.
Like most Indian refiners, BPCL buys Russian oil on the spot, mostly from traders.
According to the sources, BPCL intends to import various Russian oil grades, such as Sokol, Varandey, and Urals, under the new contract under consideration.