Russia’s Oil Discounts Surge to Record Levels as US Sanctions Take Effect

Russia has begun selling its crude oil at the steepest discounts in years after US sanctions on energy giants Rosneft and Lukoil triggered a sharp market drop.

As of November 10, the price discount for Urals crude compared to Brent reached $19.4 per barrel in the ports of Primorsk and Novorossiysk, up from $13–14 earlier in the month and $11–12 before sanctions took effect in October, according to The Moscow Times, citing Kommersant on November 12.

These markdowns approach levels seen during the early months of the full-scale invasion of Ukraine, when geopolitical shocks and EU embargoes pushed discounts above $30 per barrel. However, Brent prices are now much lower, hovering around $66 per barrel, compared to over $100 in 2022, according to The Moscow Times.

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However, buyers in India and China—key importers of Russian crude—are becoming increasingly cautious. Bloomberg reported that five major Indian refiners have not placed orders for December shipments, while Chinese state-owned companies Sinopec and PetroChina have paused purchases altogether due to fear of seconadry sanctions.

Analysts at Euler expect temporary disruptions in Russian exports as logistics adjust to the new sanctions, though sea shipments remain steady for now. US authorization for transactions with Rosneft and Lukoil expires on November 21, raising further uncertainty over Russia’s oil export stability, The Moscow Times wrote.

Previously, it was reported that Yanchang Petroleum, one of China’s largest oil refiners, is diversifying its crude oil sources, seeking non-Russian oil for deliveries from December to February.

In the past, a regular buyer of Russian oil, primarily from the Far East export grade ESPO blend or Sokol, Yanchang is now avoiding Russian crude amid concerns over falling afoul of Western sanctions.

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