Russia's Rosneft is holding back on signing new crude oil deals with two Indian state refiners, three sources with knowledge of the matter told Reuters.
Indian refiners have been snapping up cheap Russian oil, shunned by western companies and countries since sanctions were imposed against Moscow for its invasion of Ukraine on Feb. 24, which Russia calls a "special military operation."
A lack of new term supply deals with Rosneft may push Indian refiners to turn to the spot market for more expensive oil. It also indicates that Russia has managed to keep exporting its oil despite increasing pressure from Western sanctions to choke Moscow's revenue.
Drawn to the discounts offered, three Indian state refiners-Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum-opened negotiations with Rosneft earlier this year for six-month supply deals.
So far, only IOC, the country's top refiner, has signed a deal with Rosneft, which will see it buy 6 million barrels of Russian oil every month, with an option to buy 3 million barrels more. The other two refiners' requests have since been turned down by the Russian producer, the sources said.
"Rosneft is non-committal in signing a contract with HPCL and BPCL. They are saying they don't have volumes, "said one of the sources.
Sources said the contract with IOC included payment in all major currencies such as rupees, dollars, and euros, depending on the payment mechanism available at the time of the transaction.
According to the shipping data cited by two traders in the Urals market, all four trading firms acted as suppliers of crude oil purchased from Rosneft to India.
Indian sources said Russian oil is no longer available at deep discounts and they get fewer offers for sale on a Delivered At Port (DAP) basis, an international commercial term in which the seller pays for insurance and freight and ownership is transferred to the buyer only after the cargo is discharged.
"Earlier, the companies were offering good discounts, but that is not available now." Another source said that offers have been reduced and discounts are not as good as before, as insurance and freight rates have gone up.
The lack of shipping insurance coverage has hit IOC's purchases of Russian oil under a contract it signed with Rosneft last year, sources said.
The contract gives IOC an option to buy 2 million tonnes of oil from Rosneft on a free on board (FOB) basis, which requires the buyer to charter ships and pay for insurance to load the cargoes from Russia.