The discounts on Russian Urals against the Oman/Dubai benchmark on a designated ex-ship India basis has widened to over $6 per barrel, sustaining Indian demand for Russian oil in the near-term, as per Kpler.
The steeper discounts against the earlier level of $2-3 per barrel are a result of the latest US sanctions on Russia’s top oil producers Rosneft and Lukoil.
The widening Urals–Brent discount reflects a combination of sanctions pressure, weaker demand and operational strain, Kpler noted. The recent US sanctions have complicated the transactions, shipping and insurance, raising risk premiums, forcing Russian suppliers to offer deeper discounts to keep barrels moving.
What did Sumit Ritolia say?
“For now, key buyers such as India, China and Turkey have scaled back purchases amid heightened compliance concerns. The G7 price cap and associated restrictions also limit Russia’s pricing flexibility, adding another layer of discounting pressure. Compounding these market factors, repeated Ukrainian drone attacks on Russian downstream infrastructure have disrupted refinery operations and product output, increasing crude availability domestically and amplifying the pressure to clear barrels on the export market at lower prices. Ultimately, it’s a classic supply-demand seesaw — and the price is simply reflecting that balance,” said Sumit Ritolia, Lead Research Analyst, Refining & Modeling at Kpler.
Before the November 21 wind-down deadline, India’s crude imports from Russia remained very strong (around 1.8–1.9 million barrels per day) as refiners continued to prioritise the most economical barrels ahead of the sanctions’ cutoff.
After the deadline, flows are likely to decline noticeably in the near term, because of the uncertainty and perceived risk related to sourcing barrels from Rosneft or Lukoil.
Kepler’s analysis on potential drop in Russian crude flows to India
“Based on our current understanding, no Indian refiner other than Nayara’s already-sanctioned Vadinar facility is likely to take the risk of dealing with OFAC-designated entities, and buyers will need time to configure contracts, routing, ownership structures, and payment channels. With crude linked to these entities now effectively treated as a “sanctioned molecule,” Indian refiners (aside from Nayara) are expected to pause direct purchases after 21 November,” Ritolia said.
As a result, a noticeable drop in Russian crude flows to India in the near term is likely, particularly through December and January. Loadings have already slowed since October 21, Kpler noted.
Indian refiners are pivoting to non-designated Russian entities, opaque trading channels, and alternative suppliers across the Middle East, West Africa, and the Americas.
“Complex logistics, STS transfers near Mumbai, and mid-voyage diversions underscore Russia’s adaptive response. As long as broader secondary sanctions are not enforced, India will continue importing Russian barrels, albeit through increasingly indirect and less transparent means,” said Ritolia.
India does receive Russian crude from suppliers other than Rosneft and Lukoil, and those flows remain legal for now. This means that crude supplied by non-designated Russian entities — for example Surgutneftegaz, Gazprom Neft, or independent traders using non-sanctioned intermediaries, can still be legally purchased by Indian refiners, as long as no sanctioned entity, vessel, bank, or service provider is involved.
“Unless more expansive secondary sanctions are introduced, India will continue to buy from a non-sanctioned supplier of Russian oil. The reasons are multiple: the geopolitical and economic dimensions are both essential. Political leaders will not want to be seen as bending down to US sanctions,” Ritolia said, adding Russian barrels remain highly cost-competitive, and workarounds to maintain flows are likely to emerge. “In particular, buyers may increasingly pivot to non-sanctioned Russian entities and opaque trading channels.”
