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What The Largest-Ever Oil Deal Between India and Russia Really Means
The new Trump Administration may target Russia's recent oil deals as part of its sanctions discussions. Russia's Rosneft has signed a $13 billion annual crude oil supply agreement with Indian downstream giant Reliance Industries, committing to supply 500,000 barrels per day (bpd) for 10 years. This deal constitutes 0.5% of the global oil supply and is the largest-ever commercial agreement between Russia and India. Facing Western sanctions on its oil sector, Russia is actively seeking alternative clients. India has become its largest oil importer since the 2022 invasion of Ukraine, benefiting from discounted crude prices of $3-4 per barrel. This deal solidifies Russian-Indian cooperation and could cause friction among OPEC+ members as Russia encroaches on Gulf producers’ market share in India, a key growth market. Saudi Arabia and the UAE face heightened competition, particularly since the deal supplies a substantial portion of India’s oil demand. Reliance will receive approximately 20-21 Aframax-sized cargoes of crude and three fuel oil cargoes per month at its Jamnagar refinery. The pricing will be market-driven for the first year. Reliance will now account for around 50% of Rosneft's seaborne exports, increasing its intake from an average of 405,000 bpd in 2024 to 388,500 bpd in 2023. However, the partnership faces risks from growing U.S., UK, and EU sanctions, which are intensifying against Russian clients like India and China. This comes amid declining Russian oil exports, which dropped by 120,000 bpd to 7.33 million bpd in November. Despite a 7% decline in revenue, Russian oil revenues remain higher than anticipated at $14.56 billion. Western sanctions also significantly impact Russia’s Arctic LNG operations. For example, the ice-capable LNG carrier Christophe de Margerie faces operational issues due to limited access to European shipyards and spare parts. The vessel has been out of service since the fall and unable to transport Yamal LNG cargoes. By Cyril Widdershoven for Oilprice.com
The new Trump Administration may target Russia's recent oil deals as part of its sanctions discussions. Russia's Rosneft has signed a $13 billion annual crude oil supply agreement with Indian downstream giant Reliance Industries, committing to supply 500,000 barrels per day (bpd) for 10 years. This deal constitutes 0.5% of the global oil supply and is the largest-ever commercial agreement between Russia and India. Facing Western sanctions on its oil sector, Russia is actively seeking alternative clients. India has become its largest oil importer since the 2022 invasion of Ukraine, benefiting from discounted crude prices of $3-4 per barrel.
This deal solidifies Russian-Indian cooperation and could cause friction among OPEC+ members as Russia encroaches on Gulf producers’ market share in India, a key growth market. Saudi Arabia and the UAE face heightened competition, particularly since the deal supplies a substantial portion of India’s oil demand. Reliance will receive approximately 20-21 Aframax-sized cargoes of crude and three fuel oil cargoes per month at its Jamnagar refinery. The pricing will be market-driven for the first year. Reliance will now account for around 50% of Rosneft's seaborne exports, increasing its intake from an average of 405,000 bpd in 2024 to 388,500 bpd in 2023.
However, the partnership faces risks from growing U.S., UK, and EU sanctions, which are intensifying against Russian clients like India and China. This comes amid declining Russian oil exports, which dropped by 120,000 bpd to 7.33 million bpd in November. Despite a 7% decline in revenue, Russian oil revenues remain higher than anticipated at $14.56 billion. Western sanctions also significantly impact Russia’s Arctic LNG operations. For example, the ice-capable LNG carrier Christophe de Margerie faces operational issues due to limited access to European shipyards and spare parts. The vessel has been out of service since the fall and unable to transport Yamal LNG cargoes.
By Cyril Widdershoven for Oilprice.com
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