Russia Widens Oil Discounts for China as India Pulls Back
Catherine RichardsRussia cuts oil prices for China as a US-India trade deal casts doubt on future Indian purchases.
Russia is offering its crude oil to Chinese refiners at steeper discounts as a new trade deal between the United States and India creates uncertainty over future purchases from one of its biggest customers.
This strategic price cut aims to secure demand in China after India, the second-largest buyer of Russian crude since 2022, signaled a potential reduction in its imports.
Deeper Discounts on Key Russian Grades
According to trade sources, the price adjustments on key Russian blends have been swift and significant.
The discount on Russia's ESPO blend, which is shipped from the Kozmino port, has widened to almost $9 per barrel below ICE Brent. This marks a notable increase from the $7–$8 per barrel discount that had been typical in recent months.
Meanwhile, the discount on Urals crude, Russia's flagship grade shipped from the Baltic Sea, has already reached $12 per barrel below Brent. Traders report that this discount could deepen further as market conditions evolve.
The US-India Trade Deal Catalyst
The catalyst for this pricing shift is the recent trade agreement between the U.S. and India. The deal makes lower U.S. tariffs for Indian goods dependent on India slashing its purchases of Russian oil.
With this new geopolitical pressure, Indian refiners are hesitating, forcing Russian sellers to find alternative buyers and sweeten their offers to secure market share.
China's Pivotal Role in Russian Oil Exports
As Indian refiners await clear directives on how to proceed, sellers of Russian crude are increasingly targeting China with more attractive pricing. China has been the top destination for Russian crude since the war in Ukraine began, and its importance is now set to grow.
If India scales back its imports, Russia will become even more reliant on China's appetite, refining capacity, and political willingness to absorb its oil exports.
Indian Refiners Remain in a Holding Pattern
The situation in India remains uncertain. Refiners are reportedly waiting for official government guidance before committing to future purchases of Russian oil.
At the same time, Urals is being offered in India at a widening discount to Brent, with the differential now at $11 per barrel. This is testing the appetite of Indian refiners, who must weigh the benefits of cheap Russian oil against their country's new trade commitments with the United States.
