Published by Global Banking & Finance Review®
Posted on December 5, 2024
4 min readLast updated: January 28, 2026
Rising costs have led to fewer intermediaries in the Russian oil trade with India, concentrating sales among three major trading houses.
By Nidhi Verma
NEW DELHI/MOSCOW (Reuters) - Three trading houses have become dominant sellers of Russian oil to India as many smaller players dropped out of the business due to high funding costs in Russia and lack of access to Western funds, according to data and six trading sources.
The change reverses a trend of dozens of little-known trading firms flooding the market for oil trade between Russia and key buyers China, India and Turkey, lured by prospects of higher fees to help Russian producers skirt Western sanctions.
India has become the biggest buyer of Russia's seaborne crude after Moscow's invasion of Ukraine in 2022, with purchases near record highs at 1.8 million to 2.0 million barrels per day, or more than a third of its crude imports.
The recent concentration of trade has allowed Russia to sell record oil volumes to India at the smallest discounts since 2022, though its oil remains cheaper than rival U.S. and Middle Eastern grades, according to six traders and data.
The dominance of a few players makes it easier to track them and increases the trade's exposure to further sanctions should the West ratchet up pressure on the Kremlin, traders said.
Washington and Brussels have imposed various sanctions on traders, banks and shipowners to cut the Kremlin's income, but new firms quickly replaced the sanctioned entities.
That changed in recent months.
Most Russian crude is now sold by firms such as the Dubai-based trading arm of Russian oil firm Lukoil, Litasco Middle East, and Dubai-based Hinera Trading and Black Pearl Energy Trading, according to customs data and shipping data seen by Reuters. The development has not previously been reported.
Lukoil did not respond to a request for comment. Reuters could not trace contact details for Hinera and Black Pearl Energy. The two firms ship large oil volumes sourced by Russia's largest oil producer Rosneft to India, trade sources say.
Rosneft did not respond to a request for comment.
Last year, Indian companies were getting Russian oil offers from at least 10 middlemen a month, three of the six sources said. All six sought anonymity as they were not authorised to speak with media.
Some of the sources work for Indian refiners and some for traders of Russian oil.
Traders such as Dubai-based Starex Trading and Pontus Trading, which were large suppliers of Russian oil to India last year, are no longer offering cargoes, according to customs records drawn from a commercial trade data provider and the three trading sources.
Starex Trading and Pontus did not respond to requests for comment.
Indian state refiners such as Indian Oil Corp rely on spot purchases, unlike private refiners Reliance Industries and Nayara Energy, part-owned by Rosneft, which have annual deals to import Russian oil, the sources said.
HIGH RATES
Russian oil middlemen depend on funding from Russian banks amid Western sanctions and had to abandon the trade after Russia raised interest rates to 21% in late October, the highest since 2003, two of the six traders said.
As Russia's oil flows to India became more established, its producers began to seek pre-payments from middlemen of up to two weeks before a cargo is loaded, the two sources said.
In 2022 and 2023, by comparison, payments were made weeks after loading as Russian firms were desperate to place barrels in Asia after sanctions closed off European Union markets, the two sources said.
The shrinking number of middlemen gave Russian producers more pricing power, the six traders said.
Discounts on benchmark Russian oil Urals shrank in recent months to $3 per barrel to $4 per barrel on a delivered ex-ship (DES) basis in Indian ports versus $8 per barrel last year, according to Reuters calculations based on market data.
Russian barrels still remain attractive for Indian buyers as they are $3 per barrel to $3.5 per barrel cheaper than rival grades from the United States and the Middle East, the six traders said.
Despite stronger prices, volumes of Russian seaborne oil to India remain near record highs, exceeding shipments to China.
While the concentration of trade makes it potentially easier for the West to reduce Russian oil sales with additional sanctions, Russian firms could resort again to the strategy of using multiple middlemen if needed, one of the traders said.
(Reporting by Nidhi Verma in New Delhi and Reuters reporters in Moscow; Additional reporting by Gleb Stolyarov; Editing by Florence Tan, Tony Munroe and Clarence Fernandez)
The article discusses the impact of rising costs on the Russian oil trade with India, focusing on the dominance of a few trading houses.
Key players include Lukoil's trading arm, Litasco Middle East, Hinera Trading, and Black Pearl Energy Trading.
Sanctions have increased costs and reduced the number of intermediaries, concentrating the market among a few dominant players.
Explore more articles in the Finance category
