Discount on Russian Oil Shrinks as India Pays Near-Brent Prices

The price of Russian crude oil supplied to India has climbed to record levels, despite the fact that Russian companies significantly increased shipments to the country after 2022.

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Oil crisis

According to data from Argus Media, on March 13 the price of a barrel delivered to India's western coast reached 98.93 dollars. Russian oil has never traded at such a level in the Asian market before.

Middle East Tensions Push Prices Higher

Prices have risen sharply due to the escalation of conflict in the Middle East and difficulties for tankers passing through the Strait of Hormuz, one of the most important maritime routes for global oil shipments.

As a result, the discount on Russian oil for India has shrunk to its lowest level in six months. According to Neft i Kapital, Russian crude now sells for only 4.80 dollars less than the benchmark Brent grade.

Urals Crude Also Climbs

The price of the Urals blend shipped from western Russian ports has also increased noticeably. Last Friday, the price at loading rose to 73.73 dollars per barrel, the highest level since mid-July 2024.

However, transportation costs remain a major factor. Chartering an Aframax tanker for a voyage from the Baltic Sea to India has jumped from around 10-12 million dollars in February to roughly 15 million dollars in March.

Indian Refiners Buy Massive Volumes

Major Indian refining companies, including the state-owned Indian Oil Corporation and private energy giant Reliance Industries, have taken advantage of the market situation and purchased large volumes of Russian crude.

Each company reportedly acquired about ten million barrels of Russian grades including Urals, ESPO, and Varandey.

These deals were concluded at premiums ranging from two to eight dollars above Brent, whereas in February Russian oil was still sold at a discount of about 13 dollars per barrel.

Since the United States softened sanctions last week, Indian refineries have bought roughly 30 million barrels of Russian oil, effectively absorbing nearly all available cargoes on the market.

Growing Interest Across Asia

Indian refiners are not the only buyers interested in Russian supplies. Officials from Thailand and the Philippines announced plans last week to begin negotiations on potential imports.

Some Asian economies are already facing serious energy challenges. Authorities in Sri Lanka have asked Russia through the Russian embassy to urgently arrange shipments of several batches of energy resources, as the island nation has limited domestic reserves.

Meanwhile, Bangladesh, which depends on imports for about 95 percent of its energy needs, has asked the United States to lift sanctions on Russian supplies.

Sanctions Relief Extends to Fuel Products

The easing of US sanctions has affected not only crude oil but also refined products. According to Bloomberg, around 310,000 tons of fuel — mainly diesel and naphtha — carried on about 30 vessels have been released from restrictions.

Russian petroleum products are also exported in large quantities to Brazil and several countries in Africa.

Oil Prices Remain Near $100

Despite expectations that relaxing sanctions could help reduce global oil prices, the market has remained firm, with crude still trading close to 100 dollars per barrel.

Some analysts believe the planned release of more than 400 million barrels from reserves coordinated by the International Energy Agency could influence prices. The decision to prepare such a release was announced last week, although its impact on the market remains uncertain.