The price of Russia's Urals crude oil for delivery to top buyer India is rising despite growing sanctions risks as Ukrainian attacks on Russian ports and pipelines and tightened sanctions prompt concerns about supply, four market sources told Reuters on Friday.
Ukrainian drone attacks disrupted exports in September and heightened risks of production cuts, forcing Russia to send oil to other western ports to mitigate the impact.
The discount on October-loading Urals crude has narrowed to $2–$2.50 per barrel against dated Brent from $3 in September, four sources involved in Russian oil sales to India said, as Western sanctions pressure was intensified.
Freight rates to ship Urals from Russia’s Baltic ports to India rose to $6.5–$7 million per voyage in October from $5.5–$6 million in September, traders said.
The increase reflects a decline in available shipping options due to tighter enforcement of the price cap on Russia crude exports by the European Union and the United Kingdom.
In July, the EU and UK imposed additional sanctions on Russian oil exports, including a floating price cap set at 15 per cent below the average market price — currently equivalent to around $47.60 per barrel — well below the $60 price cap set by the G7 in December 2022.
New restrictions on tankers that are subject to sanctions have further complicated Russia's oil exports. India’s Adani Group, for example, has banned sanctioned vessels from entering its ports, including the major Mundra terminal.
Combined with US sanctions, the tightened EU and UK restrictions target more than 440 tankers in the so-called "shadow fleet" used for deliveries to India as well as China.
The United States and EU have criticised India for ramping up purchases of Russian oil, with Washington imposing higher tariffs on Indian imports over its continued dealings with Moscow.
Despite the pressure, New Delhi has continued its buying.
(Reporting by Nidhi Verma in New Delhi and Reuters reporters in Moscow; editing by Jason Neely)