Steeper discounts on Russian oil test India's response to US trade deal

Discounts on Russian oil being offered to Indian refiners have widened over the past 10 days, raising the question of whether processors will be encouraged to snap up cargoes despite a trade agreement with the US that hinges on lower purchases.

Russia’s flagship Urals grade is being offered at more than $10 a barrel below Brent, inclusive of shipping and other costs, traders involved in the purchases said, asking not to be named as the information isn’t public.

According to market intelligence firm Argus, which puts discounts at around $11 a barrel, the figure stood at $9.15 until Jan. 22. The current markdown is also at least three times the level quoted by traders before the US sanctioned Russian producers Rosneft PJSC and Lukoil PJSC last October. Discounts can vary depending on payment conditions.



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President Donald Trump announced on Monday that the US would cut import tariffs on Indian goods in exchange for India ceasing to take Russian oil. While Prime Minister Narendra Modi confirmed the pact, he didn’t comment specifically on crude or other details, leaving refiners to pause purchases and seek clarity from New Delhi.

India, not traditionally a major buyer of Russian oil, turned to the producer after the invasion of Ukraine in early 2022 — driven by discounts. Purchases have eased over recent months but still averaged around 1.2 million barrels a day in January, according to Kpler, compared with a peak of 2 million barrels a day.


India is “unlikely to fully disengage” from Russian oil in the near term, Kpler said in a note on Tuesday. Imports are expected to remain broadly stable in the 1.1 million to 1.3 million barrels a day range through the first quarter and early into the next, the data intelligence firm said. Kpler put Urals discounts at around $9 a barrel to ICE Brent to India, some $4 to $5 cheaper than Venezuelan barrels.