The decision by several OPEC+ members to cut daily oil output has pushed crude prices higher, raising the price of this fuel type in currency terms. This shift could complicate Russia’s oil sales to India, as New Delhi has shown a preference for avoiding purchases at elevated price levels. Bloomberg reports that these dynamics are shaping purchasing behavior for crude from Russia in the Indian market.
On December 5, 2022, a price ceiling on Russian oil took effect, a policy coordinated by the G7, the European Union, and Australia. The cap set a maximum price of sixty dollars per barrel for Russian crude. Indian financial institutions, including the state-owned Bank of Baroda, informed local refiners that payments above the cap would not be processed. This limit is part of broader sanctions and is intended to restrain Russian energy income while keeping some crude flows from Russia to global markets intact.
Analysts note that the push by OPEC and allied producers to lift oil prices is contributing to higher costs for Russian feedstock. Banks in India have expressed concern that prices could move beyond the $60-per-barrel threshold, which would tighten the credit and purchase conditions for refineries. State Bank of India and Bank of Baroda have advised refineries that they will not authorize payments for crude priced over the mandated ceiling.
At present, Indian banks monitor the pricing environment at loading ports for Russian crude carefully. After these checks, the final invoiced price also incorporates the importer’s logistics and delivery charges, which can influence the total landed cost. These factors shape the decisions of Indian refiners regarding the sourcing of Russian oil and the management of supply risk.
Recent Bloomberg calculations indicate a decline in Russia’s crude exports via ports to about 2.9 million barrels per day. For the week of April 1 to April 7, offshore shipments fell by about 1.24 million barrels per day, marking the most pronounced decline in volumes since December of the previous year. This pattern underscores the interplay between price controls, credit constraints, and geopolitical dynamics in shaping energy trade flows, particularly in the Asia-Pacific region, where Indian demand remains a critical factor for global markets.