Russia’s flagship crude, Urals, is being offered in India at a widening discount to Brent, with the differential now at $11 per barrel and testing the appetite of Indian refiners amid the trade deal with the U.S. that calls for limited purchases of Russian oil.
Sellers are offering Urals at an $11 per barrel discount this week, widened from about $9 a barrel ten days ago, anonymous traders involved in the offerings told Bloomberg on Wednesday.
Typically, such steep discounts would have Indian refiners rushing to lock in purchases.
However, the U.S.-India trade deal and lower tariffs for Indian products in the United States depend on India slashing imports of Russian crude oil.
Refiners in India are reportedly waiting for government guidance on how to proceed, if at all, with Russian oil purchases.
Following the trade deal announced by U.S. President Donald Trump, Indian refiners seek clarification about Russian oil imports from their government, with some pre-emptively halting purchases, sources with knowledge of the matter told Bloomberg earlier this week.
President Trump broke the news of a deal with India on Monday, saying the U.S. would reduce tariffs on Indian imports in exchange for a commitment on the part of New Delhi to stop buying crude oil from Russia and boost purchases of American oil instead, along with other goods and commodities.
The deal would also grant Indian energy buyers access to Venezuelan crude and maybe even Iranian crude, as suggested by the U.S. President, providing alternatives to Russian crude.
India, the world’s third-largest crude oil importer, dramatically raised its imports of cheap Russian crude following Moscow’s invasion of Ukraine in early 2022.
For nearly four years, India imported so much Russian crude that Russia became its single biggest oil supplier, accounting for about a third of all imported crude.
But now refiners are temporarily halting Russian oil purchases and seeking clarification. Regardless of the cheap Russian crude currently on offer, India will have to take into account the U.S. deal and its implications.
By Tsvetana Paraskova for Oilprice.com
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