Russian Urals discounts have tripled in India since August as US sanctions hit

MOSCOW: Discounts for Russian flagship Urals crude in Indian ports have tripled since August against dated Brent as U.S. sanctions drive key buyers away from Moscow-supplied oil, three sources involved in the trade said.

The United States last month imposed its toughest sanctions yet on Russia’s energy sector, targeting oil majors Lukoil and Rosneft. Friday marks the deadline for companies to wind down all dealings with the two producers.

Urals crude has been a mainstay feedstock for Indian refiners since 2023, when Moscow redirected flows to Asia after the European Union banned Russian energy. But supplies to India are set to fall sharply as most refiners suspend purchases, traders said.

Reliance Industries India’s largest private refiner, stopped importing Russian crude into its Jamnagar complex in Gujarat effective November 20, a company spokesperson said on Thursday.

RUSSIA OIL EXPORTS FROM WESTERN PORTS NEAR PEAK LEVELS

Despite the sanctions, Russia’s oil exports from western ports remain near peak levels, supported by OPEC+ output allowances and domestic refinery outages caused by Ukrainian drone strikes.

Urals cargoes for December delivery are trading at discounts of $5–$6 a barrel to dated Brent, about three times wider than the $1–$2 seen in August, according to traders and Reuters calculations.

The price for Russian oil delivered to Indian ports is typically set on a delivered-ex-ship basis, meaning the price excludes transport costs and other charges borne by the seller.

Urals crude free-on-board at Russian ports is currently estimated at around $20 per barrel, depending on cargo and supplier, traders said. Most shipments are handled by Russia-linked “shadow fleet” vessels, allowing Moscow to retain part of the margin from the price differential.

Freight rates have held steady despite sanctions on vessels. An Aframax tanker carrying about 700,000 barrels from Baltic ports costs around $7.5 million for a one-way voyage, while a Suezmax trip runs $8–$8.5 million, traders said.

Russian oil shipments remain costly but manageable as enough ships are available and Urals trades below the EU’s $60 per barrel price cap, they added.