According to traders and calculations, Russia is selling oil to India for close to $80 per barrel, or $20 more than the Western price cap, as tight global oil markets assist Moscow in creating a strong demand for its shipments.
Since the middle of July, the price of Russia’s primary export grade Urals has been trading over the $60 per barrel Western price cap due to production cuts by OPEC+ countries, including Saudi Arabia and Russia.
Since 2022, India, the third-largest oil importer in the world, has taken the lead in purchasing seaborne Russian oil, mostly Urals, thanks to Western sanctions against Moscow.
According to trader data and calculations, Free-On-Board (FOB) estimates for Urals cargo shipping from Baltic ports in October were close to $80 a barrel on Thursday for Indian consumers.
An official at an Indian refiner that frequently purchases Russian oil explained the most recent price increase by stating that Russia has low inventory levels and its production has been reduced.
Cuts have reduced discounts for Urals at Indian ports from $6–$7 per barrel to $4–$5 per barrel compared to dated Brent, according to four trading sources involved in the activities. The dealers mentioned prices for cargo loading in late October.
“Urals prices are rising once more. Alternatives are far more expensive and difficult to find, according to a trader with knowledge of the Russian oil industry.
Inquiries for comments were not answered by Indian Oil Corp (IOC.NS), Bharat Petroleum Corp (BPCL.NS), Hindustan Petroleum Corp (HPCL.NS), Mangalore Refinery and Petrochemicals Ltd (MRPL.NS), HPCL Mittal Energy Let, Reliance Industries Ltd (RELI.NS), or Nayara Energy Ltd.
About two-fifths of India’s total refined fuel consumption is accounted for by diesel, generally produced at higher yields from Russian Urals oil.
In the meantime, a worldwide shortage of diesel and gasoline-fueled Russia’s decision to forbid their exports, which increased the appeal of Urals crude.
If crude trades below $60 per barrel, purchasers can still employ Western services like shipping and insurance thanks to the Western price ceiling on Russian oil.
Since the cap was implemented, Russian oil has significantly decreased its use of Western shipping and insurance companies, challenged by a rise in world oil prices toward $100 per barrel.
According to preliminary LSEG data, Turkey was the second-largest purchaser of Urals oil cargoes in September, after China and Bulgaria. According to the Indian source, Russian oil is sold to consumers in new markets like Brazil.
