Discounts on Russian Urals oil compared to the benchmark Brent in the Asia-Pacific region have reached their highest level in the past 12 months. This occurred after the largest oil refineries in India and China reduced purchases due to the tightening of US sanctions against key oil companies of the Russian Federation. The price difference between Russian oil and Brent increased by about $2 per barrel, reaching approximately $4 per barrel.
This is reported by Finway
Decline in Export Revenues and Market Implications
Although the current discount is lower than what was observed after the first wave of Western sanctions in 2022 (when it reached $8 per barrel), this trend intensifies pressure on Moscow’s export revenues. In October, the Russian Federation’s revenues from oil and gas exports decreased by 27% compared to the same period last year. This significantly impacted the funding capabilities for the military and budgetary needs of the Kremlin.
US President Donald Trump stated that after the introduction of new sanctions, oil exports from Russia have significantly decreased, and India has almost completely halted purchases of Russian raw materials.
Impact on the Asian Market and Actions by Saudi Arabia
According to Asian traders, the five largest oil refineries in India, which previously imported about 65% of Russian oil (1.2 million barrels per day), have ceased purchases due to sanction pressure. Against this backdrop, Saudi Arabia, the world’s largest oil exporter, has lowered prices for all its oil grades for Asian customers. This could support Indian refineries that are forced to reduce purchases of Russian oil and stimulate imports of Saudi crude. In particular, Reliance Industries, which was previously the largest importer of oil from Russia in India, increased its purchases from Saudi Arabia by 87% in October. Discounts on Saudi oil may prompt Reliance and state-owned oil refineries in India to further increase imports from this country.