- India and China Reduce Russian Crude Imports Amid U.S. Pressure.
- No Formal Ban, But Market Pricing Drives Import Decline.
- Urals Discount Narrows as Supply Tightens and Prices Rise.
Rising pressure from the U.S. on Russian oil buyers is causing China and India to cut back on their imports, even though there aren’t any official bans in place. In India, the drop in import volumes has been more gradual—quarterly figures were almost unchanged compared to the first quarter of 2025, but they did see a decline of about 12% year-over-year. Monthly data reveals a consistent decrease since March, with shipments in June plummeting by over 10 million barrels, reports AJOT.
Legal Access Remains but Market Forces Prevail
Russian crude is still legally accessible to buyers in Asia. The European Union and the United Kingdom have independently lowered the G7 price cap to $47.60 per barrel, but the U.S. hasn’t backed this adjustment. This situation weakens the cap’s enforcement, especially since oil is traded in dollars and the financial systems are U.S.-controlled. No bans are stopping crude exports to India or China, suggesting that the recent drops are more about pricing than compliance with sanctions.
Price Differentials and Supply Shifts Impact Demand
As of July 18, Brent crude was trading close to $70 per barrel, while Urals crude was around $58 per barrel FOB, creating a discount of about $12. Although this discount is still significant, it has widened again after narrowing earlier this year when spot buying in Asia slowed down.
Russian crude is becoming less appealing due to an increasing reliance on term contracts, which limits spot availability, and higher domestic refinery operations that are tightening export supplies. These trends have pushed Urals prices up, diminishing the arbitrage advantage and leading refiners in India and China to cut back on opportunistic purchases.
Tanker Activity Shows Managed Risk, Not Avoidance
The data on tanker movements indicates a trend of calculated risk management instead of outright avoidance. In June, Greek-owned tankers made a comeback in trades linked to Russia, hinting at a growing confidence in logistics and compliance, even with the ongoing sanctions.
China Increases Brazilian Imports as Part of Diversification
China’s strategy for diversification is becoming more apparent in its crude oil sourcing. In June, Brazilian crude exports to China skyrocketed to over 30 million barrels, almost double the amount from the same month in 2023. These shipments mainly consist of heavy-sweet grades that are similar to Russian Urals, providing comparable refining yields. While this shift hasn’t significantly increased tonne-miles yet, it highlights a focus on value-driven diversification rather than a geopolitical shift.
Global Trade Flows Start to Rebalance
As crude flows from the Atlantic Basin start to head towards Asia, Europe may increasingly rely on supplies from the Middle East and the U.S. This shift could impact U.S. refiners, particularly those designed for light sweet grades, by altering the availability of feedstock and refining margins. Meanwhile, clean product exports from the U.S. Gulf Coast to Europe—especially ULSD and naphtha—are likely to see an uptick, boosting demand for product tankers like MRs and LR1s. The gasoline trade is expected to continue focusing on the route from Europe to the U.S. Atlantic Coast.
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Source: AJOT
