Russian oil discount for Indian refiners jumps to $8 a barrel

Russian crude suppliers are now offering Indian refiners a higher discount of up to $8 a barrel, doubling since October after sanctions were announced on Rosneft and Lukoil, according to three people aware of the development. That could increase oil shipments from the non-sanctioned oil suppliers from the Eurasian nation, experts said.The discounts on Urals crude hovered around $2-4 a barrel after the 23 October US decision to impose sanctions on the two largest Russian crude suppliers, according to data from Finnish think tank Centre for Research on Energy and Clean Air (CREA).

In November, after the sanctions took effect, they averaged $6.6 per barrel."Discounts will see a further increase. However, even if the discounts do not surge from here on, there may be an increase in purchases from Russia,” said one of the three people mentioned above–all three spoke on the condition of anonymity.“Although India has diversified its sourcing of oil, in the short term, no other supplier can fill the gap and meet the demand which Russia has been catering to," the person said.The discounts have now jumped significantly to as high as $8 per barrel, said Prashant Vashisht, a petroleum sector expert and senior vice president and co-group head, corporate ratings at Icra Ltd.To be sure, in December, Russian oil imports by India declined to 1.2 million barrels per day (mbpd) compared with 1.8 mbpd in November, showed Kpler data.Russian oil turned cheaper following Western sanctions after its invasion of Ukraine, with the highest discounts of around $30 per barrel in 2022.