Indian importers of Russian oil are demanding larger discounts from sellers due to increasing trade risks.
Points of attention
- Indian importers are pushing for larger discounts on Russian oil purchases due to mounting trade risks and disagreements triggered by European and American restrictions on oil prices.
- The demand for increased discounts, potentially up to $10 per barrel, highlights the complex dynamics in international oil trade and the challenges faced by both buyers and sellers.
- Russian oil sellers are facing pressure from Indian buyers to meet higher discount expectations, with possible implications on oil supply distribution to other markets like China.
India wants big discounts on Russian oil
Buyers said the discount should expand to about $10 per barrel to the Brent price to meet the price ceiling.
Banks have stepped up checks due to differences between US and EU policies on Russian oil. For comparison, in September discounts were only $2-3 per barrel.
Some Russian sellers have said that the Indian demands are too high. They say that some of the October deliveries could go to China, which would reduce volumes for India.
According to a source familiar with the shipment schedule, Russian oil supplies to India will be about 1.4 million barrels per day in October. For comparison, it was 1.5 million barrels in August and 1.6 million barrels in September.
The final figures will be known after the negotiations are concluded in the next two weeks. Even a $10 discount will not allow the price to fall below the new EU-UK ceiling of $47.60 per barrel.
On October 1, the EU lowered the price ceiling for Russian oil from $60 to $47.60. Insurance and transportation services by Western companies are only allowed if this level is met. The US did not support this decision. Last week, Brent traded at $67 per barrel.
The European Commission intends to reach an agreement on a new price ceiling with all G7 countries in the future. According to a European Commission representative, the restriction remains relevant because Western carriers continue to participate in the transportation of Russian oil.
The growing gap in oil sanctions policy will increase confusion for market participants and weaken compliance with restrictions, said Tom Boughton of consulting firm S-RM.
Russia actively uses the so-called shadow fleet — tankers with Russian connections and domestic insurance. Such shipments are not subject to the price ceiling.
Russian companies have been successfully circumventing price restrictions since 2022 by using their own fleet or forging documents, traders and analysts say. Weak control over sanctions encourages market participants to ignore the bans without fear of punishment.
Price restrictions will be a hindrance to Russian traders, but do not pose a serious threat, said Benjamin Godwin, a partner at consulting firm PRISM Strategic Intelligence. “The US and EU could deal a serious blow to Russia’s oil and gas industry, but this would cause severe shocks to the global economy.”
