Published by Global Banking & Finance Review®
Posted on November 6, 2025
3 min readLast updated: January 21, 2026
Russian oil discounts widen as Indian and Chinese refiners cut purchases due to U.S. sanctions, impacting Moscow's budget and future exports.
NEW DELHI/MOSCOW (Reuters) -Russian oil is trading at its steepest discounts to Brent in a year in Asia, as major Indian and Chinese refiners reduce purchases following fresh U.S. sanctions on leading Russian producers, industry sources said.
The price gap for Russia's flagship Urals crude widened by $2 to about $4 per barrel below Brent for December arrival, the widest discount seen in about a year, according to four trading and refining sources involved in Russian oil supplies.
The discounts, though less severe than those seen after the initial wave of Western sanctions in 2022, when they stood at around $8 per barrel, reflect mounting pressure on Russian oil revenues — a critical lifeline for Moscow's budget.
The United States recently imposed tough restrictions on Russian oil giants Lukoil and Rosneft, setting a November 21 deadline for companies to conclude all transactions with these entities.
In response, key Indian refiners including Hindustan Petroleum Corp, Bharat Petroleum Corp, Mangalore Refinery and Petrochemicals, HPCL-Mittal Energy, and Reliance Industries have paused orders for Russian oil intended for December arrival. Together, these five companies account for about 65% of India's Russian oil imports.
Representatives of Indian refiners, as well as Rosneft and Lukoil, did not respond to Reuters' requests for comment.
ASIAN MARKET FOR RUSSIAN OIL DIVIDED
Chinese state oil majors have also suspended purchases of seaborne Russian oil following the U.S. sanctions on Rosneft and Lukoil, multiple trade sources said on Thursday, pushing ESPO Blend oil trade to discounts in Chinese ports. The move by both Indian and Chinese refiners, Russia's two largest buyers, threatens to leave more Russian oil unsold.
Sources say the Asian market for Russian oil is now divided, with barrels from non-sanctioned entities fetching a premium, while cargoes linked to sanctioned suppliers or ships are sold at steep discounts. Overall demand for Russian oil in India has declined sharply, and total December imports are expected to drop significantly.
The downturn in Russian oil sales comes ahead of a planned visit by President Vladimir Putin to India and ongoing pressure from Washington for both India and China to curb Russian imports. Analysts warn that deepening discounts could further strain Moscow's finances.
(Reporting by Nidhi Verma in New Delhi and Reuters reporters in Moscow; editing by Alexandra Hudson)
Urals crude oil is a type of crude oil produced in Russia, known for its medium density and sulfur content, often used as a benchmark for pricing other crude oils.
Brent crude oil is a major trading classification of crude oil originating from the North Sea, used as a global price benchmark for oil.
Oil discounts occur when the price of oil is lower than the market benchmark, affecting revenue for oil-producing countries and influencing global oil trade dynamics.
Refiners process crude oil into usable products like gasoline and diesel, and their purchasing decisions significantly impact oil prices and market dynamics.
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