Russian Oil Prices Plunge as India and China Halt Key Purchases

Russian oil prices have dropped sharply. This follows India and China refiners stopping purchases. The U.S. sanctions deadline is nearing for state-controlled producers Rosneft and Lukoil.

Urals Crude Takes a Hit

The price of Urals crude fell significantly last week. Urals crude is Russia’s main export blend. It reached $36.61 per barrel for Novorossiysk cargoes. Bloomberg reported this on Monday, citing Argus Media data. The discount for Urals against the Brent benchmark grew. It reached $23.51 per barrel. This is the largest discount since March 2023. Urals previously traded at only a $12-13 discount. That was before the new U.S. measures were announced. The gap has nearly doubled since then. It nears the early-2023 record of $40.

Buyers’ Strike Intensifies

The selloff intensified as the deadline neared. The November 21 deadline requires ending all Rosneft and Lukoil deals. Several major Indian refiners have already stopped direct buying. These include Reliance Industries and Bharat Petroleum. Hindustan Petroleum, Mangalore Refinery, and HPCL-Mittal Energy also halted purchases. They used to buy about 1 million barrels per day.

Chinese state refiners, Sinopec and PetroChina, suspended direct purchases. Smaller private Chinese plants also stopped buying. This “buyer strike” affects about 45% of Russia’s oil exports to China. Rystad Energy figures were cited by Bloomberg this month.

Russia’s Oil Volumes Stuck at Sea

This sudden demand drop left Russian suppliers with oil at sea. JPMorgan estimates that one-third of Russia’s seaborne exports are stuck. This is about 1.4 million barrels per day. The oil sits on tankers used as floating storage. JPMorgan analysts noted a new disruption phase. Sanctions targeting Rosneft and Lukoil are taking effect.

This prompted India and China to cut December purchases sharply. The Kremlin expects another hit to its finances. Budget revenues already fell over 20% this year. Rosneft and Lukoil account for half of Russia’s crude exports. That’s 2.2 million barrels per day. When including Surgutneftegaz and Gazprom Neft, the impact grows. Around 70% of Russia’s export volumes are now affected.