Russian oil trade: Discounts soften impact of losing sanctioned barrels; Indian refiners ramp up non-sanctioned crude

US sanctions on Rosneft and Lukoil are having a softer financial impact on Indian refiners than initially feared, with wider discounts on Russian crude nearly offsetting the expected drop in volumes.

Indian state-owned and private refiners have halted cargoes from the two sanctioned firms and are instead sourcing from non-sanctioned suppliers.


Recent tenders for January loadings—mostly from traders—have received offers “far lower than what the refiners sought”, with a mandatory clause confirming that the crude’s origin is not sanctioned.

An industry executive was quoted by ET as saying, “By current trends, we may not be able to get more than a third of the Russian cargoes we usually take in a month. But the volume loss will be offset by gains on discounts. Volume goes down by a third, while discounts increase by almost a third.”

Discounts on Russia’s flagship Urals grade have widened two-and-a-half times to $5 per barrel to Brent for January loading, compared with $1.8–2 before sanctions.

Brent, which briefly climbed above $65, has now eased to $62.5, as per ET.

This means the economic incentive for Indian refiners to continue buying discounted Russian crude remains intact, and switching to alternative grades has not raised overall procurement costs.

Indian refiners had expected cost pressures after the sanctions limited access to cheaper Russian barrels.

Instead, refiners are now “seeking maximum available non-sanctioned barrels for January,” reported ET.

Volumes for December may fall even further as refiners become more cautious, cutting orders even from non-sanctioned sellers.

A well-supplied global oil market—supported by higher Opec and non-Opec output—and hopes of a US-brokered peace between Russia and Ukraine are also helping keep prices in check.

With the sanctions wind-down period expiring on November 21, Indian reliance on Russian crude is set to drop sharply after a burst of accelerated imports this month.

To plug the shortfall, refiners are stepping up sourcing from the Middle East and the Americas. Because Russian shipments take about a month to reach India, refiners are already planning February procurement from alternative suppliers based on anticipated shortages.

Reliance Industries has confirmed that its export-only Jamnagar unit has stopped processing Russian crude to maintain uninterrupted access to the lucrative European market.

EU allows imports only when refiners can physically segregate Russian crude and certify that exported products come from non-Russian processing lines.

The US, meanwhile, is tightening pressure on Moscow by targeting its top oil exporters while simultaneously pushing for a Ukraine peace plan.

Energy has also become a central element in ongoing India–US trade negotiations.


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