In a blow to Russia’s war chest, Urals crude is fetching its deepest discounts to Brent futures in over a year across Asian markets, as top buyers in India and China slash orders amid escalating U.S. penalties on major Russian producers.
Trade and refining insiders report that the benchmark Urals grade for December delivery is now trading roughly $4 a barrel below Brent, a $2 widening from recent levels and the sharpest gap since late 2023. While not as punishing as the $8-per-barrel chasm triggered by early Western sanctions in 2022, the erosion underscores intensifying strain on Moscow’s oil-dependent coffers, which form the backbone of its federal budget.
The shift follows stringent U.S. measures unveiled last week against heavyweights Lukoil and Rosneft, mandating a November 21 cutoff for all global dealings with the pair. In a ripple effect, India’s largest Russian oil procurers—Hindustan Petroleum Corp, Bharat Petroleum Corp, Mangalore Refinery and Petrochemicals, HPCL-Mittal Energy, and Reliance Industries—have halted bookings for December cargoes. These firms, which handle nearly two-thirds of India’s Russian crude inflows, are treading cautiously to sidestep compliance risks.
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Spokespeople for the Indian refiners, along with Rosneft and Lukoil, offered no immediate response to inquiries from Reuters.
The chill extends to China, where state-controlled oil giants have likewise idled seaborne Russian imports, sources confirmed Thursday. This has dragged down prices for the ESPO Blend in Chinese terminals, leaving surplus volumes adrift. As Russia’s premier Asian outlets, the tandem pullback by New Delhi and Beijing risks flooding the market with unsold barrels, fracturing trade dynamics: shipments from unsanctioned sellers command premiums, while those tied to restricted firms or vessels trade at fire-sale rates.
India’s overall Russian oil uptake for December is projected to plummet, capping a broader slide in demand. The timing is awkward, coinciding with an anticipated trip by President Vladimir Putin to India and persistent U.S. entreaties for both nations to rein in flows from Moscow. Experts caution that persistent price erosion could exacerbate fiscal headaches for the Kremlin.
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