India's Russian Oil Imports Hit Record, Discounts Drive Flows

India imported more than half its crude oil from Russia in June, a record share that underscores how deeply discounted barrels have reshaped global trade flows. Russian crude accounted for over 50% of India's seaborne imports last month, according to data from Vortexa, up from roughly 40% in May and less than 2% before the Ukraine conflict.

The jump came after a temporary U.S. sanctions waiver on certain Russian oil transactions expired in late May. Indian refiners, including Reliance Industries and state-owned processors, continued buying Urals crude at discounts of $12–$15 a barrel versus Brent, traders said. The discount has narrowed from the $30-plus levels seen in 2023 but remains wide enough to make Russian crude the cheapest option for Indian refineries.

Payment and shipping logistics have adapted. Most cargoes are now settled in rupees, yuan, or dirhams through banks in Dubai and Hong Kong, bypassing the dollar-based system. A fleet of aging tankers, many operating without Western insurance, carries the crude from Russia's Baltic and Pacific ports to India's west coast refineries. The insurance gap is covered by Russian state-backed providers or by Indian insurers willing to take the risk, according to shipping sources.

India's refining capacity, roughly 5 million barrels a day, processes the discounted crude into diesel, gasoline, and naphtha. A portion of those products is exported to Europe and Africa, effectively allowing Russian crude to re-enter Western markets as refined fuels. That dynamic has drawn criticism from European officials but remains legal under current sanctions, which target Russian crude but not products made from it in third countries.

The shift has widened the spread between Urals and Brent, with Urals now trading at a persistent discount of $10–$15 a barrel, compared with a near-parity before 2022. That discount has squeezed margins for other heavy-sour crude producers, particularly Iraq and Saudi Arabia, who have lost market share in India. Indian refiners have also cut purchases of West African grades, pushing those barrels into the Atlantic Basin at lower prices.

For crude oil traders, the key variable is whether the discount persists. Indian demand is expected to grow by 300,000–400,000 barrels a day in 2025, according to the International Energy Agency. If Russian supply remains available at a discount, India will likely absorb an even larger share. That would keep Urals-Brent spreads wide and pressure other heavy-sour producers to cut prices or redirect cargoes.

The next test comes in August, when OPEC+ meets to discuss production quotas. Russia's ability to maintain export volumes while complying with its OPEC+ target will determine how much discounted crude remains available for India. Traders said the discount is likely to persist as long as Russia needs to keep its crude competitive in a market where buyers have alternatives.