New Delhi: In view of the ongoing Russia-Ukraine conflict, the Indian Oil Corporation (IOC) will no longer accept cargo of Russian crude oil and Kazakh CPC Blend cargo on a free-on-board (FOB) basis due to insurance risk.
A tender notice has been sent to traders on Monday who submit cargo offers into IOC's regular crude oil buy tenders, according to news agency Reuters source.
FOB is a term typically used in maritime trade parlance to indicate whether the seller or the buyer is liable for goods that are damaged or destroyed during shipping.
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"FOB origin" means the buyer is at risk once the seller ships the product. In such a scenario, the purchaser pays the shipping cost from the factory and is responsible for the damaged goods while in transit.
"FOB destination" means the seller retains the risk of loss until the goods reach the buyer.
Meanwhile, exporters believe that the ongoing conflict may have an implication on the country’s trade in that region as it would affect the movement of consignments, payments and oil prices.
The Federation of Indian Export Organisations (FIEO) has asked exporters to hold their consignments to the region or goods that take the Black Sea route, according to PTI report.
Also, the quantity of impact on trade will depend on the duration of the war.
On the ther hand, India's crude oil import bill is set to exceed $100 billion in the current fiscal year ending March 31, almost double its spending last year, as international oil prices trade at seven-year highs.
India spent $94.3 billion in the first 10 months (April-January) of the ongoing financial year that started April 1, 2021, according to data from the oil ministry's Petroleum Planning & Analysis Cell (PPAC).