Reliance Signs Deal with Russian Company Rosneft: Procuring Crude Oil in Rubles

Reliance Industries Signs One-Year Deal with Russian Company Rosneft

Reliance Industries has entered into a one-year agreement with the Russian company Rosneft. Under this agreement, Reliance will import at least 3 million barrels of Russian crude oil every month. Payment for the Russian crude will be made in rubles.

Oil-producing nations, collectively known as OPEC+, are scheduled to meet on June 2nd. During this meeting, they may decide to continue the production cut to stabilize oil prices. In such a scenario, this deal will assist Reliance Industries in obtaining discounted-priced oil.

India is the Third Largest Importer of Oil in the World

India is the third-largest importer and consumer of oil in the world. Following the onset of the Russia-Ukraine conflict in 2022, Western countries imposed restrictions on purchasing oil from Russia. Consequently, India emerged as the largest buyer of Russian crude oil. India makes payments for Russian crude in rupees, dirhams, and Chinese yuan.

Imports from Russia Have Increased by Over 40% in 3 Years

India had only purchased 2% of its crude oil requirement from Russia in 2020. However, prior to the Russia-Ukraine conflict, this figure increased to 16% in 2021 and further escalated to 35% in 2022. Presently, India is procuring approximately 40% of its crude oil requirements from Russia.

Crude oil constitutes a third of India’s total trade value. This implies that roughly one-third of India’s imports comprise crude oil. Consequently, this trade surplus will mitigate the trade deficit.

Western Countries Imposed Sanctions on Russia

Following the conflict with Ukraine, Western countries imposed sanctions on Russia. As a result, India, the world’s third-largest importer of crude oil, capitalized on this situation by increasing its oil imports from Russia instead of Europe.

Reliance Industries is India’s Largest Company

In terms of market capitalization, Reliance Industries is the largest company in the country. The company has a market capitalization of approximately ₹19.69 lakh crore. Rosneft, Russia’s third-largest company, also holds significant market capitalization, approximately ₹7 lakh crore ($85 billion).