Reliance Industries Signs One-Year Oil Deal with Russia’s Rosneft in Roubles

Reliance Industries has signed a one-year agreement with Russia’s Rosneft to buy oil in roubles, reflecting a shift away from Western financial systems due to sanctions.

Reliance Industries, the operator of the world’s largest refining complex, has secured a one-year agreement with Russia's Rosneft to purchase at least 3 million barrels of oil monthly. The payment for these transactions will be made in roubles, marking a significant shift from the traditional use of dollars and euros.

This move aligns with Russian President Vladimir Putin’s initiative for Moscow and its trading partners to circumvent the Western financial system, which has been under increased scrutiny due to sanctions from the US and Europe. These sanctions were imposed in response to Russia's invasion of Ukraine in 2022.

The agreement not only benefits Reliance by securing oil at potentially discounted rates but also comes at a crucial time. The Opec+ group, consisting of the Organization of the Petroleum Exporting Countries (OPEC) and allies like Russia, is expected to extend its voluntary supply cuts beyond June. This group's next meeting is scheduled for June 2, where they will discuss these output cuts.

India, ranking as the world's third-largest oil importer and consumer, has become the leading buyer of seaborne Russian crude. This shift follows the halt in purchases and the imposition of sanctions against Moscow by Western nations. To navigate these sanctions, India has previously paid for Russian crude using a mix of currencies, including rupees, dirhams, and Chinese yuan.

While privately-run Reliance Industries has managed to secure this term deal, state-owned Indian refiners have been purchasing Russian oil on the spot market. They have faced challenges in finalizing long-term supply agreements for the current year.

Rosneft, in an emailed response to Reuters, acknowledged India as a strategic partner but did not comment on the specifics of their agreements, citing confidentiality.

This deal underscores the evolving dynamics in global oil trade, particularly in the face of geopolitical tensions and economic sanctions. By opting to pay in roubles, Reliance Industries and Rosneft are setting a precedent that might influence future international trade agreements.