In a landmark agreement, Russia’s state-owned oil company Rosneft has signed a $13 billion per year deal with India’s Reliance Industries to supply 500,000 barrels per day (bpd) of crude oil. The 10-year deal, reportedly the largest energy agreement between the two nations, represents 0.5% of global oil supply and further solidifies energy ties between India and Russia.

Deal Details

Under the agreement, Rosneft will supply 20-21 Aframax-sized crude cargoes (80,000 to 100,000 metric tons) and three fuel oil shipments monthly to Reliance’s world-class refining complex in Jamnagar, Gujarat. The supply will begin in January 2025 and includes an option to extend for an additional 10 years. Pricing will be adjusted annually based on global oil market dynamics, with crude priced at a differential to the Dubai benchmark.

The supply will largely consist of medium-sulfur, diesel-rich Urals crude, priced at a discount of $3 per barrel to Dubai quotes. Lighter grades, such as ESPO and Sokol, will command premiums of $1.50 and $2 per barrel, respectively.

Strengthening Energy Ties

The deal underscores the growing energy partnership between India and Russia, particularly as Western sanctions continue to limit Moscow’s traditional oil markets following the Ukraine invasion. With no sanctions restricting Indian refiners, the country has emerged as the largest importer of Russian crude, overtaking the European Union.

India’s refiners, including Reliance, have benefited from discounted Russian crude, which is $3 to $4 cheaper per barrel compared to other grades. This pricing advantage has helped Indian refiners secure more affordable energy supplies while boosting refinery margins.

Impact on the Global Oil Market

The agreement is significant, accounting for roughly half of Rosneft’s seaborne oil exports. This reduced availability for middlemen and other traders could reshape trade flows, particularly in Asia, where India and China dominate as major crude importers. The deal may also heighten competition with Middle Eastern oil producers, as India is one of the fastest-growing energy markets globally. Reliance’s move strengthens its position in the market, enabling it to maintain a competitive edge in securing long-term energy supplies.

Strategic Timing

The deal comes ahead of a planned visit by Russian President Vladimir Putin to India and amidst U.S. President-elect Donald Trump’s call for a resolution to the Ukraine conflict. It was approved during Rosneft’s board meeting in November, emphasizing the strategic importance of this partnership.

Market Reaction

The announcement saw a surge in trading activity for Reliance shares, with 4.2 million shares changing hands in three block deals. However, the company’s stock remained subdued, trading 1.1% lower at ₹1,264.24, down 2.5% for the year so far.

Energy Independence Goals

India, which imports more than a third of its energy from Russia, continues to leverage partnerships to secure affordable and stable energy supplies. This deal aligns with India’s broader strategy to meet its growing energy demands while diversifying sources and maintaining geopolitical neutrality.

By securing this long-term agreement, Reliance and Rosneft have set a precedent for future collaborations, reinforcing the deepening energy cooperation between India and Russia.