India’s state-run refiners are planning to buy as much Russian oil as possible while shifting their purchase strategy from tenders to negotiated deals to extract deeper discounts, people familiar with the matter said.

State refiners have bought more than 15 million barrels of Russian crude from traders as well as Russian firms since the outbreak of war, paying in dollars using regular banking channels, they said. The Ukraine invasion began February 24.

Russian energy exports have so far escaped Western sanctions, ensuring trouble-free payment channels for Indian buyers.

Discount Math

Indian refiners, however, haven’t so far received the kind of discounts cited in analyst reports, and are now seeking deeper cuts from Russian suppliers, according to the people mentioned above. S&P Global Platts had assessed a discount of $33 per barrel for Russian oil to the benchmark dated brent on a free-on-board basis last month.

Indian refiners have been sourcing Russian crude only on a delivered basis to avoid freight and insurance risks, which have dramatically risen as ships don’t want to venture into war zones, and insurers and reinsurers are charging heavy premiums. “If we were to assume a cost of $10 per barrel for the increased freight and insurance premium, the discount on a delivered basis should have been about $23. But the best discounts for Indian refiners have been between $10-15 per barrel,” said one of the persons cited, adding that the discounts in the early days of the war were even smaller.

State refiners usually purchase from the spot market through tenders, picking up the lowest bidder. Since Russian crude is trading at a discount, the supplier of such crude would win the tender easily with just a little discount, the person cited earlier said, prompting a change in strategy.