Russia is offering its main export crude to Indian refiners at the lowest price in at least two years, Bloomberg reports. Urals crude, shipped from Baltic and Black Sea ports, is now offered at a $7-per-barrel discount to Brent on a delivered basis, according to people familiar with the matter.
The steep discount follows US sanctions imposed on 22 October against Russia’s two largest oil producers, Rosneft and Lukoil. Oil and gas revenues account for roughly 30% of Russia’s federal budget, and Russian oil tax receipts fell 27% year-on-year in October, according to Russia’s Finance Ministry.
The October sanctions mark a tactical shift.
When G7 countries introduced a $60 price cap in December 2022, Russia responded by building a shadow fleet of aging tankers operating outside Western insurance and shipping services. By late 2024, over 60% of Russian crude moved on these vessels, rendering the cap largely symbolic.
Sanctioning Rosneft and Lukoil directly changes the calculus: buyers risk exclusion from the dollar system not for paying above a threshold, but for dealing with the companies at all. Cheap Russian oil is now plentiful—but sanctions-compliant cargo is not.
Sanctioned sellers
Most Indian refiners skipped orders for Russian crude that arrived after the sanctions took effect. The 21 November compliance deadline has now passed, with companies risking exclusion from the dollar-based financial system if they continue dealing with Rosneft or Lukoil.
In recent days, some Indian processors have grown open to resuming purchases—but only from non-sanctioned Russian sellers, Bloomberg reports. The problem: roughly four-fifths of the oil cargoes being offered to India come from Rosneft, Lukoil, or their subsidiaries.
For Indian refiners seeking cheap crude while staying within US rules, supply remains tight despite the bargain prices.
A US Treasury official said on 20 November that Chinese and Indian banks and refineries are “risk averse, do recognize the importance of the relationships with the West, and are moving to comply.”
Urals prices hit a multi-year low
The sanctions are having a measurable impact. Urals crude has fallen at least 21% since the October measures were announced, according to Treasury officials. Urals loaded at Russia’s Novorossiysk port traded at $45.35 per barrel on 12 November, according to market data—the lowest since March 2023.
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Before sanctions, the discount for Urals to Indian refiners stood at around $3 per barrel. The new $7 discount represents more than a doubling of the price gap in roughly one month.
Millions of barrels in limbo
As the 21 November deadline passed, approximately 48 million barrels of Rosneft and Lukoil crude were stranded at sea, according to market analysis—oil that major buyers now refuse to touch.
India and China remain Russia’s largest oil customers after European markets closed following the 2022 invasion of Ukraine. Whether they continue to avoid sanctioned cargoes or return to Russian crude at deep discounts will determine the effectiveness of the sanctions in squeezing Moscow’s war revenues.
