LONDON/NEW DELHI: Russian oil exporters are charging more for their oil in major market India than at any time since the war in Ukraine started as a growing number of shippers and intermediaries take part in the trade, weakening the impact of Western sanctions on Moscow.
The exporters have had to offer deep discounts to encourage shipping companies and traders to move their crude and brave the risk of sanctions since Russia’s full-scale invasion of Ukraine in February 2022.
Among the restrictions, the United States and European Union imposed a price cap of $60 per barrel on Russian oil sales, meaning Western shippers and insurers can only participate in Russian oil trade if the oil is sold below the price limit.
Russian exporters have struck deals this month to sell their flagship Urals oil for delivery to Indian refiners at discounts of $3 to $3.50 per barrel to the global Brent crude benchmark, according to five traders and Indian refining officials.
That is the narrowest discount for Urals since Reuters started monitoring Russian oil prices in India in early 2023, when the discount was as high as $20 per barrel. It suggests deals above the price cap, as Brent is trading about $82 per barrel, although that also depends on freight costs.
The shrinking discount shows Russia’s success in finding new buyers for its oil. India has no sanctions against Moscow and became the biggest buyer of Russian seaborne crude ahead of China and Turkey after European refiners stopped imports.
It also reflects an increase in shippers carrying Russian oil.
“You’re seeing greater numbers of ships that have found ways to circumvent sanctions by operating outside Western jurisdiction,” said Michelle Wiese Bockmann, principal analyst with maritime data group Lloyd’s List Intelligence.
Over 630 tankers – some of them older than 20 years – are currently involved in shipping Russian oil, as well as sanctioned Iranian crude, according to Lloyd’s List Intelligence.
The operators are largely based in China and the United Arab Emirates, the data group says, and account for about 14.5% of the overall global tanker fleet.
Before the Ukraine war, this so-called shadow tanker fleet totalled around 280-300 vessels, according to Lloyd’s List Intelligence.
The price cap initially created a shortage of ships for Russian oil sales to India and China, with freight rates reaching up to $20 million per tanker per one way voyage, according to traders.
American Dollar Exchange Rate