Russian Urals crude discount widens to lowest since 2023

14:50

By: Dakir Madiha

Russian Urals crude discount widens to lowest since 2023

Russia’s flagship Urals crude is trading at its steepest discount to global benchmark Brent in nearly three years, underscoring mounting pressure on Moscow’s key export revenues as Western sanctions persist and Indian demand weakens.

The discount on Urals expanded to $28 per barrel on a free on board basis at the Baltic ports of Primorsk and Ust Luga between February 9 and 13, the widest gap since April 2023, according to pricing data from Argus Media cited by the Russian newspaper Kommersant. Over the same period, the outright price of Urals fell by $1.77 to $42.28 per barrel. Reuters data showed a similar spread, with Urals at $44.14 FOB Primorsk compared with dated Brent at about $72.45.

The widening differential comes as India, previously the largest buyer of seaborne Russian crude, sharply curtails purchases following an interim trade agreement with the United States. Under the deal announced in early February, Washington reduced tariffs on Indian goods from 50 percent to 18 percent, including the removal of a 25 percent punitive levy imposed last August, in exchange for New Delhi’s commitment to halt imports of Russian oil.

Industry data indicate that India imported around 1.1 million barrels per day of Russian crude in January, the lowest level since November 2022. Russia’s share of India’s total oil imports fell to 21.2 percent, the smallest proportion since October 2022. January volumes declined 23.5 percent from December and were roughly one third lower than a year earlier.

Reliance Industries, India’s largest private refiner, said in early January that it did not expect any Russian crude deliveries that month. Imports are projected to decline further, with Kpler analyst Sumit Ritola estimating volumes could average about 800,000 barrels per day by March.

The deeper discounts pose a direct challenge to Russia’s public finances. Federal oil and gas revenues fell 24 percent in 2025 to 8.48 trillion roubles, equivalent to $108 billion, the lowest level since 2020, according to Finance Ministry data. Hydrocarbon income accounts for roughly a quarter of the federal budget.

As India scales back, China has moved to absorb more discounted Russian barrels. Chinese imports of Russian crude are expected to reach about 2.07 million barrels per day in February, a record high and well above January’s 1.7 million barrels per day, based on estimates from Vortexa Analytics and Kpler.

Emma Li, China analyst at Vortexa, told Reuters that independent refiners known as teapots view Russian supply as more dependable amid concerns over potential disruptions to Iranian oil shipments linked to the risk of military conflict.

Additional pressures are weighing on Urals prices. Kommersant reported that higher freight rates tied to icy conditions in the Baltic Sea have added to export costs. Seasonal factors, combined with the need to secure alternative transport arrangements under sanctions, have intensified logistical challenges for Russian sellers.

The discount had already begun to widen after US sanctions imposed last year on Russian oil producers Rosneft and Lukoil took effect in late November 2025. Meanwhile, Middle Eastern suppliers led by Saudi Arabia are regaining market share in India that Russia captured following its invasion of Ukraine in 2022.