Indian Refiners Eye Cheaper Russian Oil From Non-Sanctioned Sellers

The price of the Urals blend for Indian buyers has dropped to a discount of up to USD 7 per barrel to dated Brent on a delivered basis, for cargoes loading in December and arriving in January, according to people familiar with the matter. Most Indian refiners had paused purchases of Russian crude arriving after the sanctions on Rosneft and Lukoil took effect last week, effectively curtailing a trade that surged after Russia’s 2022 invasion of Ukraine, when India capitalised on discounted supplies.

On Thursday, Reliance Industries, India’s largest refiner, announced that it has stopped importing Russian crude for its SEZ refinery in Jamnagar from 20 November. From 1 December, all product exports from this refinery will be derived from non-Russian crude. The final cargo subject to the new rules was loaded on 12 November, the company said. Any Russian cargo arriving after sanctions began will be processed only at the refinery supplying the domestic market.

However, sentiment among Indian refiners has shifted in recent days as Urals prices have fallen further. Some processors are now open to purchasing Russian oil from non-sanctioned entities, though only about one-fifth of currently offered cargoes are free of links to blacklisted sellers, the sources noted.

Before the latest sanctions, Urals crude was trading at a discount of around USD 3 per barrel. The US curbs, which follow earlier sanctions on Gazprom Neft PJSC and Surgutneftegas PJSC, have led Indian refiners to increase purchases from other regions, including West Asia.

Data from global analytics provider Kpler show that Russian crude supplies to India averaged 982,000 barrels per day (bpd) between 1 and 20 November, compared with an average of 1.75 million bpd from January to September. Despite near-term declines, Kpler forecast last week that a complete halt to Russian imports remains unlikely.