MOSCOW, July 29 (Reuters) – Discounts on Russian Urals crude oil delivered to India have dropped to between $1 and $2 a barrel against the dated Brent benchmark this week because of supply concerns, three trade sources said.
Stronger demand from Indian refiners was linked to renewed hostilities in the Iran war and disruptions to shipping through the Strait of Hormuz.
The sharp rebound for Russia’s flagship grade marks a significant change from early July, when Urals cargoes were trading at discounts of more than $10 a barrel in India, pressured by abundant Middle Eastern supplies and weaker buying interest from China.
China and India remain the largest buyers of Russian crude, which has been redirected from Europe to Asia since Western sanctions and embargoes were imposed in response to Russia’s war in Ukraine.
Cargoes of Urals crude for delivery in late August and early September were offered in India at discounts of $1 to $2 a barrel this week, the sources said.
Indian refiners have stepped up purchases of Russian oil as concerns over Middle Eastern supply security resurfaced after renewed U.S. military action against Iran and fresh disruptions to tanker traffic through the Strait of Hormuz, they said.
“Indian refiners have been buying large volumes of Russian oil this year because it has proved to be a stable feedstock,” one source said, adding that prices remained highly volatile because of the geopolitical tensions influencing markets.
Chinese refiners also turned to Russian oil this week because of Middle East supply disruptions.
India’s imports of crude oil from Russia and Latin America surged in the second quarter while imports from the Middle East declined as flows through the Strait of Hormuz were constrained, according to trade data and market participants.
Russian crude has continued to account for a substantial share of India’s oil imports, supported by competitive pricing and stable supplies despite periodic market disruption and logistics challenges.
(Reporting by Reuters reporters in MoscowAdditional reporting by Siyi Liu in SingaporeEditing by David Goodman)
