Discounts for Russian Urals crude oil destined for Indian ports have reached their narrowest levels since 2022, according to four market traders. As the availability of spot supplies tightens, Indian refiners are compelled to explore alternatives through purchasing tenders.
In July, the average spot discount for Urals crude fell to $2.25 per barrel for cargoes arriving in India. This represents a decrease from last month’s wider range of $2.70 to $3.10 per barrel compared to dated Brent on a delivery ex-ship (DES) basis.
This narrow discount marks the tightest pricing for Urals oil bound for India since the onset of the Ukraine conflict in 2022. India has emerged as the largest buyer of Russian seaborne crude following Moscow’s redirection of its energy exports away from the European Union, which imposed a ban on Russian oil.
However, some Indian refiners lacking long-term supply agreements with Russian oil companies are experiencing shortages of Urals crude in July. Reliance Industries, India’s largest private refiner, secured a term supply contract with Rosneft, a major Russian oil company, last year.
This agreement has further limited the availability of Urals oil in the spot market for other refiners. Additionally, traders noted increased demand for Urals crude from Turkish refiners, adding more competition among Indian buyers for the supply.
Turkey’s largest refiner, Tupras, resumed purchasing Urals oil in April after halting purchases earlier this year due to stricter U.S. sanctions on Russia. Traders indicated that improving global refining margins have also contributed to rising demand for Russian oil, as refiners seek to enhance crude processing.
As of now, India continues to be the predominant buyer of Russian Urals oil by sea, with imports reaching a 10-month peak in May.