Russia is offering its Urals crude oil to India at the steepest discount in two years, currently around $7 a barrel cheaper than Brent crude, reported The Mint via a Video report.

This significant price cut follows the imposition of new US sanctions on Russia's key oil producers, Rosneft and Lukoil, which have disrupted the oil trade with India, forcing Indian refiners to reconsider their purchases or find ways to comply with the sanctions.

Despite the sanctions and pressure from the US, India is trying to capitalise on the deep discounts, although its direct shipments from Russia have dropped sharply by about 66% in November due to these restrictions and payment complications.

The discount on Russian oil has widened progressively since mid-2025. Earlier in the year, discounts were in the range of $1-$4 per barrel, but with the new sanctions effective from late November 2025, the price gap has doubled, making Russian crude significantly cheaper for Indian refiners.

The limitations caused by sanctions require Indian companies to access Russian oil through non-sanctioned entities or intermediaries, complicating logistics but still enabling some level of procurement at attractive prices.

This discount trade is critical for Indian refiners such as Reliance Industries, although several major refiners are expected to reduce or halt direct purchases from sanctioned suppliers to comply with the US sanctions.

Because of the sanctions, Indian refiners are also hedging their supply risks by increasing crude oil imports from other Middle East producers and the United States, accepting an estimated $3–$5 billion extra cost annually if Russian barrels are entirely cut off.

This diversification is a hedge against possible disruptions in Russian crude flow and rising geopolitical tensions. Indian refiners and government policies reflect a careful balancing act—leveraging discounts from Russia while avoiding conflict with critical supply partners like the US and Middle Eastern countries.

India remains the world’s third-largest oil importer and had grown to source nearly 40% of its crude from Russia by 2024-25, surpassing other major suppliers like Iraq and Saudi Arabia due to the significant price advantage.

However, the recent US sanctions targeting Russian producers have led to a recalibration of India's oil import strategy, with a sharp fall in direct imports from Russia and a move towards more complex supply chain arrangements involving shadow tankers, ship-to-ship transfers, and indirect buying to evade sanctions exposure while maintaining crude oil affordability.

In sum, Russia's sharp price discount on its Urals crude is aimed at preserving its market presence in India amid stringent US sanctions. India, facing a complex geopolitical and economic environment, is balancing the discount bargains with the need to comply with international sanctions while diversifying crude sources to protect its energy security.

The evolving trade dynamics reflect broader strategic adjustments in India-Russia energy ties amid growing US influence and geopolitical risks in the global oil market.​

Based On The Mint Report