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Russian crude discount (Urals)
What it is
Urals is Russia's medium-sour export grade, redirected to Asia after European sanctions. It traded $15-20/bbl below Brent at the peak, and Russian crude rose from under 2% of India's imports pre-2022 to roughly a third of the basket
Discounts narrowed to $3-6/bbl by 9MFY26, then widened again to $7-12 through 2026 as sanctions on Rosneft and Lukoil pushed sellers to compete for the remaining buyers
Impact on industries
- The largest source of Indian refining advantage since FY23 - complex refineries absorbed Urals unmodified, and discounts widen as Chinese buyers step back
- Now geopolitical rather than commercial - a Feb 2026 understanding cut US tariffs on Indian goods from ~50% to 18% for curbing Russian purchases, and alternatives cost more
- Secondary sanctions risk is live - measures against suppliers of ~60% of India's Russian barrels create compliance, payment and shipping exposure
- Unwinding the pivot raises landed costs, as alternatives carry freight differentials and no comparable discount