Russia has achieved a reduction in the discount for selling oil to India to $5 per barrel. Nevertheless, New Delhi has no intention of giving up Russian oil since Urals still remains the most affordable option available in the global market. Despite India's desire to reduce its dependence on Russian oil, it is likely to retain its position as the largest consumer of Russian oil.
The maintenance of Urals' competitive advantage compared to other oil grades in the Indian market was reported by "Kommersant," citing data from the analytical company Kpler.
After the European Union imposed sanctions on Russia due to the outbreak of hostilities in Ukraine, India became the primary consumer of Russian oil, receiving it on DES (delivery at the destination port) terms. The second-largest importer of Russian oil by sea remains China (including pipeline deliveries). Oil exports to China and India by sea in August amounted to 1.1 million barrels per day and 1.6 million barrels per day, respectively.
The increase in shipments to India and China is partly due to station discounts. However, in recent months, this discount has been decreasing against the backdrop of reduced oil exports agreed upon by Russia and Saudi Arabia. At the beginning of the year, Urals' discount to Brent on CIF terms was approximately $40 per barrel, whereas currently, it is around $5.
The reduction in discounts has led Indian officials to make statements about their readiness to reduce dependence on Russian oil by replacing it with cheaper alternatives from the Middle East. However, Urals still remains the most economical option. The cheapest Saudi grade, Arab Heavy, costs about $7.5 more per barrel than Urals, Iraq's Basrah Medium is $7 more expensive, and the closest in properties, Arab Light, is $10 more expensive.
Source: Kommersant.
