The cheap oil from Russia, which used to be the lifeline of Asian refiners, seems to be losing its appeal. Recent trade reports say that Indian and Chinese refiners have cut back on their purchases by a lot, which has caused Russian crude to be cheaper than global benchmarks like Brent.
Why are discounts getting bigger?
Since the start of the war in Ukraine, Moscow has depended on Asian buyers to buy its oil exports because of Western sanctions. But India’s and China’s demand for the product has gone down recently because of logistical problems, payment problems, and weaker global demand.
Because of this, Russian suppliers are said to be offering bigger price cuts, sometimes as much as $8–$10 per barrel less than Brent crude, to keep up their export levels.
India’s refiners are taking a step back.
Indian refiners used to be the fastest-growing buyers of Russian crude, but now they are getting it from other places. Russian crude is less appealing now because of problems with payments because of sanctions, delays in settling currency, and rising shipping costs.
Private companies like Reliance Industries and Nayara Energy are looking into Middle Eastern grades because they are more consistent and have fewer compliance risks.
China is being careful.
Chinese refiners are also buying less oil from Russia, especially from ports in the Far East. Many state-backed refiners are limiting imports to better manage their inventories because refining margins are getting smaller and domestic demand is leveling off.
What it means for oil markets around the world
The fall in Asian demand for Russian crude could have big effects on the market.
OPEC+ pressure: Russia might try to change its output goals to keep prices stable.
Market rebalancing: Saudi Arabia and Iraq, two other oil-exporting countries, could regain market share in Asia.
Price changes: If Russian supply has trouble finding new buyers, Brent prices may get short-term support.
In the Future
Analysts say that Russia may have to keep giving big discounts to stay competitive if payment methods and logistics don’t get better.
The move is a strategic shift for India and China, putting energy security and compliance ahead of short-term gains.
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