Russian oil discounts likely to hold despite new EU caps

Indian refiners to get around $3 per barrel discount from September even after fresh curbs

- Rituraj Baruah

India's oil refiners are expected to benefit from discounts on Russian oil even after a new price cap imposed by the European Union (EU) takes effect next month, three people in the know of the developments said.

The discounts are expected to remain at the current levels of around $3 per barrel. In July, the EU capped prices of Russian oil at $47.6 per barrel effective 3 September, 15% below $60 per barrel implemented since December 2022.

"The discounts are likely to continue in September too as the new price cap kicks in. After US pressure to discontinue purchase of Russian oil, discounts somewhat increased to around $3 per barrel," said one of the two people mentioned above.

The EU's 19 July statement announcing new measures against Russia said: "The EU is curtailing Russia's energy revenues through a number of different measures. The EU is lowering the price cap for crude oil from $60 to $47.6 per barrel, to align it with current global oil prices and is introducing an automatic and dynamic mechanism to modify the oil price cap and ensure that this price cap is effective. Oil exports still represent one third of the Russian government's revenues."

Queries sent to Indian Oil Corp., Bharat Petroleum Corp. Ltd, Hindustan Petroleum Corp. Ltd, and Russian-state owned oil producer Rosneft, remained unanswered.