The price gap that once made Russian Urals crude a go-to for Indian refiners is rapidly shrinking. Traders say the discount on Urals oil for August delivery to India has narrowed to just $1.70–$2 per barrel below dated Brent—the tightest spread since Russia invaded Ukraine in 2022.
That discount is down from $2–$2.50 in July, and well below the steep markdowns India enjoyed throughout 2023 and early 2024. The reason? High demand from India and Turkey, reduced spot market availability, and falling Russian supply due to domestic refinery runs and upcoming maintenance at the Sakhalin-1 project.
For Indian refiners, the math is shifting. Spot Urals is still cheaper than other grades, but the advantage is eroding. Some refiners are already eyeing alternatives like UAE’s Murban or U.S. WTI, traders say—grades that previously lost out to the heavily discounted Russian barrels.
The narrowing spread also shows how Russia is keeping volumes moving despite sanctions, by keeping Urals prices just under the West’s $60-per-barrel price cap. That threshold allows access to Western insurance and shipping, which cuts logistics costs. In April, for example, shipping rates for Urals from Russia’s Baltic ports to India fell to $6 million per voyage, down from $7 million the month prior, thanks to increased availability of compliant tankers.
But the supply squeeze is real. Several Indian refiners have reportedly been unable to secure Urals cargoes for August. Part of that is due to term deals—Rosneft’s agreement with Reliance Industries means large volumes are tied up, leaving less crude on the spot market.
India, now Russia’s biggest seaborne oil customer, is even considering building three new strategic reserves to bolster energy security—an acknowledgment that Russian barrels may not stay cheap or plentiful forever.
By Julianne Geiger for Oilprice.com
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