India, China still buying Russian oil, but they demand huge discounts – Markets Insider

Russian energy revenues may finally be feeling the pinch — the European Union’s sweeping sanctions against the country’s energy exports are about to kick in on December 5, more than nine months into the Ukraine invasion.
As Kremlin is set to lose its single largest customer, it is redirecting seaborne exports to Asia, in particular to India and China. 
But that’s proving to be difficult business. India and China now account for about two-thirds of all Russian seaborne crude-oil exports, and as major customers, they are demanding massive discounts for their purchases, Bloomberg’s oil strategist Julian Lee wrote on Sunday.
Russia’s flagship Urals crude oil was trading at a discount of $33.28, or about 40% to the international Brent crude oil at the end of last week, according to Bloomberg’s analysis of data from trade news service Argus and the Intercontinental Exchange in Europe. That’s a steep fall from the $2.85 discount that Urals was trading at in 2021.
Due to the Urals’ widening discount, Russia is losing about $4 billion a month in energy revenues, per Bloomberg’s calculations.
This is significant, especially since oil prices have fallen sharply in recent months due to fears about a recession, strong Russian output, and falling demand, after prices hit multi-year highs earlier in 2022.
That is also why Washington doesn’t appear to be too worried about India and China’s huge purchase of Russian oil, even if they pay prices above a G7 imposed price cap.
Russian oil “is going to be selling at bargain prices and we’re happy to have India get that bargain or Africa or China. It’s fine,” US Treasury Secretary Janet Yellen told Reuters on November 11.
Brent crude futures are about 4.3% higher this year so far at around $81.30 a barrel after spiking over 30% in the days after the Ukraine war broke out.
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