U.S. sanctions deepen Russian oil discount to $20 per barrel under Brent

Wednesday 12 November 2025 - 15:20

By: Dakir Madiha

U.S. sanctions deepen Russian oil discount to $20 per barrel under Brent

The latest U.S. sanctions targeting Russia’s top oil producers, Rosneft and Lukoil, have driven the discount on the country’s flagship Urals crude to $20 per barrel below Brent, marking the steepest reduction this year. The price gap mirrors levels seen shortly after Russia’s invasion of Ukraine in 2022.

By November 10, the Urals discount reached $19.40 per barrel at Russia’s key ports of Primorsk and Novorossiysk, compared to $13–14 earlier this month and $11–12 before the sanctions took effect in October, according to Russian business daily Kommersant. The widening price gap highlights the increasing strain on Russia’s oil sales caused by the U.S. measures, implemented on October 22.

Buyers exit Russian oil market

The sanctions have prompted an exodus of major buyers. Five of India’s largest refineries, Reliance Industries, Bharat Petroleum, Hindustan Petroleum, Mangalore Refinery and Petrochemicals, and HPCL-Mittal Energy have refrained from placing any orders for Russian crude for December delivery. These refineries account for two-thirds of India’s Russian oil imports this year. Similarly, Chinese state giants Sinopec and PetroChina have ceased purchases, fearing secondary sanctions.

Budget under pressure as oil revenues plunge

The growing price disparity is dealing a severe blow to Russia’s federal budget, heavily reliant on oil and gas revenues to fund its war in Ukraine. Russian tax revenues from oil and gas dropped by 27% year-on-year in October, amounting to 888.6 billion rubles ($9.7 billion). For the first ten months of 2025, hydrocarbon revenues fell 21% to 7.5 trillion rubles, compared to 9.54 trillion rubles a year earlier.

The financial impact is spilling beyond Russia’s borders. Lukoil has declared force majeure on its operations at Iraq’s massive West Qurna-2 oil field after Baghdad froze payments and canceled export shipments in line with U.S. sanctions. This development has cut 480,000 barrels per day, around 9% of Iraq’s total oil production.

Uncertainty looms over Russian oil exports

The U.S. waiver allowing transactions with Rosneft and Lukoil is set to expire on November 21, raising further doubts about Russia’s ability to maintain stable oil exports. With the Urals discount nearing the $30 level seen earlier this year and Brent crude trading at approximately $65 per barrel, well below the $80, 120 range of 2022, the financial strain on Moscow continues to mount.