A section of Indian oil refiners is exploring buying non-sanctioned Russian oil after it is being offered at the highest discount in two years, with US sanctions on top producers Rosneft PJSC and Lukoil PJSC upending a lucrative trade.
The price of Ural blend from Russia for Indian refiners has slipped to a discount of as much as $7 a barrel to dated Brent on a delivered basis. The offer is for cargo loading in December and arriving in January, people familiar with the matter told Bloomberg.
Most Indian refiners have skipped placing orders for Russian crude that would arrive after sanctions on Rosneft and Lukoil, which took effect last week, all but ending a trade that flourished after Russia’s invasion of Ukraine in 2022, as India took advantage of a steady flow of cheaper oil.
On Thursday, India’s largest refiner, Reliance Industries, said it has stopped importing Russian crude for its SEZ refinery in Jamnagar with effect from November 20. From December 1, all product exports from the refinery will be obtained from non-Russian crude oil, it added
Moreover, any cargo arriving after the sanction came into effect will be processed at the refinery earmarked for domestic supply. The ‘final’ such cargo was loaded on November 12, the company informed.
In recent days, however, the mood across Indian refiners has changed due to the cheaper Urals prices, with some processors now open to purchasing Russian oil from non-sanctioned sellers, the people said. Still, only around a fifth of the cargoes being offered are free from non-blacklisted entities, they added.
Prior to the sanctions on Rosneft and Lukoil, the discount for Urals was around $3 a barrel. Since the US sanctions, which add to similar curbs on Gazprom Neft PJSC and Surgutneftegas PJSC, India’s refiners have purchased more crude from other regions, including West Asia.
According to global real-time data and analytics provider Kpler, crude supplies averaged at 982,000 barrels per day (bpd) from Russia from November 1-20, compared with an average of 1.75 million bpd in January to September. Despite near-term declines, a complete halt to Russian imports was unlikely, Kpler had predicted last week.