India is expected to continue purchasing discounted Russian oil given the country's sensitivity to commodity prices, senior BCS oil and gas analyst Ronald Smith believes.
Smith noted that the Urals discount to Brent, which is currently affected by an embargo, is expected to return to $40 this quarter.
“If the price of Urals returns to above $60 but that is still $20-$40 cheaper than Brent, it will be very hard for India to refuse to buy Russian crude,” Smith told Sputnik.
The difficulties in shipping Russian crude are expected to decrease as the year progresses, Smith concluded. However, he warned that a refined product embargo set for February 5 could add additional complexity.
Western Sanctions No Obstacle
India has been closely monitoring any potential additional sanctions by the European Union targeting Russia.
In the meantime, the G7 price cap has not yet impacted imports of Russian crude, given that the current price is $53-$56 per barrel.
Smith underlined that the major issue in the global oil market is weak prices, and if Brent prices increase to $100, the Urals price is expected to approach $60 at least.
India has been purchasing Russian oil, with Russia's share in the country's oil import basket rising from 0.2% in early 2022 to over 24%, or almost 1.17 million barrels per day, by the end of the year.
The country is the third-biggest importer of crude after China and the US.
Russia, for its part, replaced India's traditional oil suppliers Saudi Arabia and Iraq, climbing to the top position as Delhi's crude supplier last October.