Discounts on Russian oil offered to Indian refineries have increased over the past 10 days, raising questions about whether refiners will be interested in purchasing batches, despite a trade agreement with the United States that depends on reduced purchases, Bloomberg reports, writes UNN.
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According to traders involved in the purchase, Russian Urals crude is being offered at more than $10 a barrel cheaper than Brent, including shipping and other costs.
According to analytics firm Argus, which estimates discounts at approximately $11 per barrel, this figure was $9.15 as of January 22. The current discount is also at least three times higher than the level indicated by traders before the US imposed sanctions on Russian producers Rosneft and Lukoil last October. The size of discounts may vary depending on payment terms.
On Monday, US President Donald Trump announced that the US would lower import duties on Indian goods in exchange for India ceasing purchases of Russian oil. Prime Minister Narendra Modi confirmed the agreement but did not comment on specific details regarding oil or other aspects, leaving refineries to suspend purchases and seek clarification from New Delhi.
India, which was not traditionally a major buyer of Russian oil, turned to the producer after Russia's invasion of Ukraine in early 2022 due to discounts. Purchases have declined in recent months, but averaged about 1.2 million barrels per day in January, compared to a peak of 2 million barrels per day, according to Kpler.
"India is unlikely to completely abandon Russian oil anytime soon," Kpler said in a note published on Tuesday. The analytics firm forecasts that imports will remain broadly stable in the range of 1.1 to 1.3 million barrels per day during the first quarter and early next. Kpler estimated the discount on Urals crude compared to ICE Brent for India at approximately $9 per barrel, which is $4-5 cheaper than Venezuelan oil.