Russian Oil Discounts Widen for China as Indian Purchases Falter

As India is tentatively pulling back from buying Russian oil after the U.S. trade deal, Russia’s crude is being offered in China at widening discounts to attract Chinese refiners, trade sources have told Reuters.

This week, the discount of the ESPO blend that Russia ships from the Kozmino port in the Far East widened to almost $9 per barrel to ICE Brent, up from the $7–$8 a barrel discount of the past months, according to the trade sources.

Discounts for Russia’s flagship Urals crude grade shipped from Russia’s Baltic Sea port, and mostly to India, have already widened to $12 per barrel below Brent and could widen further, the traders told Reuters.

The widening of the discounts began this week after the U.S. and India reached a trade deal, in which lower U.S. tariffs for Indian goods are dependent upon India slashing its purchases of Russian oil.

With Indian refiners still waiting for guidance on how to proceed with the oil trade with Russia, sellers of Russia’s crude are looking to attract additional purchases in China with hefty discounts of the Russian blends to Brent.

Since the 2022 start of the war in Ukraine, China has become the top buyer of Russian crude, with India second.

As India is now poised to curb purchases, at the very least, China becomes an even bigger market for Russia’s crude, if there is enough appetite, capacity, and political will for Beijing to boost cheap Russian oil imports.

India, for its part, is hesitant.

Refiners in India are reportedly waiting for government guidance on how to proceed, if at all, with Russian oil purchases.

At the same time, Urals is being offered in India at a widening discount to Brent, with the differential now at $11 per barrel and testing the appetite of Indian refiners amid the trade deal with the U.S. that calls for limited purchases of Russian oil.

By Charles Kennedy for Oilprice.com

More Top Reads From Oilprice.com