russia Cuts Urals Price in Attempt to Offset Losses from India’s Leaving the Market

moscow is trying to reorient oil exports after a sharp reduction in supplies to India, offering China Urals oil at a discount of about $1.50 per barrel from Brent.

Since July, state-owned Indian Oil Corporation and Bharat Petroleum Corporation Limited have stopped importing russian oil, replacing it with purchases of at least 22 million barrels from suppliers in the Middle East and the USA to be shipped in September-October.

Beijing will not be able to fully compensate for the lost volumes with its orders: Urals is not a base grade in the structure of Chinese imports due to the remoteness of russian ports and high logistics costs. Besides, Chinese state-owned companies are refraining from large-scale increases in purchases due to the risk of new US sanctions.

According to the Foreign Intelligence Service of Ukraine, in the short term, russia will only be able to replace part of the lost Indian demand through individual contracts with the PRC and smaller Asian buyers. Forced discounts on Urals will increase pressure on export revenues, deepening the federal budget deficit of the rf.