Russian Urals Crude to China Hits Record Low as India Cuts Demand

Russian Urals crude bound for China has fallen to a record-low price as weakening demand from Indian refiners reduces buyer competition, Bloomberg reported on January 22, citing market participants.

According to traders familiar with the transactions, Urals crude is currently trading at a discount of about $10 per barrel to Brent futures. This marks a sharp reversal from August last year, when the grade was priced at a $1 per barrel premium to spot Brent.

The pricing pressure reflects a broader downturn in Russian crude exports, which have slipped to their lowest level since August last year. The decline is largely attributed to mounting difficulties for Moscow in delivering oil to its key buyer, India.

India's appetite for Russian crude has cooled significantly amid US sanctions on producers such as Lukoil and continued pressure from the Trump administration. As the world's third-largest crude importer, India saw its December 2025 oil imports fall to a more than three-year low.

'This dynamic is weighing on Urals pricing while opening a window of opportunity for Chinese refiners, even though Urals is not traditionally the main Russian grade supplied to China,' the report noted. Urals is shipped from Russia's western ports, far from Chinese refineries, which typically favor ESPO crude loaded from Far Eastern ports via the East Siberia–Pacific Ocean pipeline.

Data from cargo-tracking firm Kpler show that floating storage of Urals crude has surged to over 13 million barrels, the highest level in at least a decade, as India cuts back purchases. Nearly half of this volume is stored in the Arabian Sea, while close to one-fifth is located near the Singapore Strait and the Yellow Sea, making access relatively convenient for Chinese buyers.

Kpler data indicate that China's Urals imports have climbed to around 400,000 barrels per day so far this year, a record high. Shipping analytics firm Vortexa reports a similar upward trend.

Bloomberg previously cited Kpler's senior crude analyst as saying that Russian sellers have sharply reduced Urals prices for China, pushing them even below Iranian crude levels. The pricing advantage is drawing strong interest from refiners in Shandong, home to most of China's independent refining capacity.

'China is clearly the ideal alternative buyer for these barrels,' the report said, adding that Indonesia, with its onshore storage capacity, could also emerge as a potential destination.

Bloomberg-compiled vessel tracking data show that Russian crude exports averaged 3.16 million barrels per day in the four weeks to January 18. This was about 700,000 bpd below the pre-Christmas peak and 260,000 bpd lower than the level recorded in the four weeks to January 11.

Shipments to India dropped sharply last month to around 37 million barrels, equivalent to 1.2 million bpd, the lowest level since November 2022. This compared with 1.78 million bpd in November, when importers rushed to secure cargoes ahead of US sanctions on two major Russian oil exporters.

According to India's Business Standard, India had slipped to third place among buyers of Russian fossil fuels by December 2025, with Turkey overtaking it as the second-largest buyer.

However, The Guardian noted that India's reduced intake appears to be a short-term compliance-driven fluctuation, rather than a full retreat. Four of India's seven major refineries still rely heavily on Russian crude, and recent purchases by Reliance Industries, the country's largest buyer of Russian oil, suggest underlying demand remains intact.

Kpler chief crude analyst Homayoun Falakshahi added that export data show the emergence of several new Russian crude exporters by December, likely acting as shadow intermediaries between Russian oil majors and refineries in India and elsewhere.

'This suggests Russia is restructuring its supply chain,' Falakshahi said. 'It may take two to three months for new companies to take the lead in exports. Eventually, most crude will be supplied by firms that are neither Russian oil majors nor Lukoil-linked. Russia will not sit idle as sanctions take effect — it will do everything possible to circumvent them.'

He added that for Indian companies still willing to buy Russian oil, the risk is economically compelling. 'It could save nearly $4 billion a year. We expect at least public-sector imports in India to recover to previous levels in the near term.'