Alexey Gromov, Principal Director on Energy Studies of the Institute for Energy and Finance, commented to the Secret of the Firm magazine on Russia's readiness to supply oil for export at large discounts.
India intends to get a large discount on oil from Russia. Amid the US pressure and other risks, New Delhi wants to buy Russian crude at $70 per barrel, with a market value of $108 per barrel.
The threat of a sharp reduction in oil production is more dangerous for Russia than the prospect of selling crude at a discount, Alexey Gromov said. The fact is that when developing an oil field, oil wells are filled with water to increase production.
If this process stops, the wells will be flooded, and the extracted oil will no longer be usable.
“Therefore, Russia will be forced to accept such an unprecedented discount for India. But even $70 is a good value, because the Russian budget is "made up" at a price of $42-43. I think that in the near future Moscow will not give up the practice of granting discounts. It is important for us that export volumes do not decline significantly. In addition, as the coronavirus restrictions are lifted in China, the demand for oil will grow, and the amount of discounts will decrease,” Gromov explained.
Subscribe for updates
and be the first to know about new publications