Synopsis:
Russia’s oil exports plunge as Trump sanctions hit Rosneft, Lukoil. India and China slash December orders, oil prices fluctuate, Moscow’s energy revenue faces sharp declines.
Russia’s crude oil now trades at its steepest discount in a year, marking a fresh blow to Moscow’s energy revenues. New sanctions by President Donald Trump on Rosneft and Lukoil have sharply hit demand from India and China, once Russia’s two most dependable oil buyers.
Both nations have slashed orders for December, widening the price gap between Russian Urals and Brent crude in Asia to four dollars per barrel, the widest in twelve months. For Moscow, the timing could not be worse, as every lost buyer weakens its fiscal lifeline. On the other hand, oil prices on global markets briefly spiked before stabilizing near 59 dollars per barrel.
India Steps Back from Russian Crude
India, long the biggest importer of Russian seaborne oil, has turned cautious. For months, cheap Russian oil protected India’s economy from global price swings. However, those savings are slipping away fast.
Leading refineries, such as Hindustan Petroleum, Bharat Petroleum, Mangalore Refinery, and Reliance Industries, have halted orders for December cargoes. Together, these firms make up nearly two-thirds of India’s Russian imports. Even Nayara Energy, partly owned by Rosneft, faces output cuts due to shipping and payment risks.
Indian refiners now prefer Middle Eastern and U.S. oil despite paying two to three dollars more per barrel. The government fears that losing discounts may increase the national oil bill by 11 billion dollars this fiscal year. Still, negotiators expect to quietly resume some Russian flows once clarity emerges on secondary sanctions. It feels like a pause rather than a permanent break.
China’s State Firms Pause Purchases
China, Russia’s largest overall buyer, has also eased its seaborne purchases. State energy giants like PetroChina and Sinopec have canceled shipments ahead of the November 21 compliance deadline. Only pipeline deliveries, such as those carrying ESPO blend oil, continue as usual because they operate outside the dollar system.
Independent “teapot” refineries in Shandong have paused too, fearing financial fallout. For Beijing, the challenge is striking a balance between energy security and geopolitical messaging. Officials reiterate their opposition to “unilateral sanctions” but remain pragmatic about maintaining steady imports through indirect routes if necessary.
In Chinese ports, ESPO crude now trades at fresh discounts, showing buyers’ caution. Yet, pipeline stability offers some relief. In my view, Beijing is playing a patient game waiting for prices to favor its traders again.
Moscow’s Dilemma and Global Risks
In Moscow, the reaction is a mix of defiance and frustration. President Vladimir Putin admitted to “some losses” but promised not to yield to American pressure. Exports at sea have already decreased by 10% since the sanctions were imposed. Floating storage rose to 380 million barrels as unsold volumes accumulated.
Rosneft and Lukoil plan to sell their foreign assets and redirect crude to domestic use to circumvent restrictions. Still, lost revenues are significant. Analysts estimate that a 20 percent decline in exports could cut Russia’s budget income by five billion dollars each month.
For global markets, the impact remains uncertain. OPEC members hint at additional output to curb volatility. Brent may rise toward seventy dollars if Indian and Chinese cuts persist. However, as history shows, traders often find creative ways to circumvent sanctions.
Currently, oil prices are driven more by politics than by supply. That’s what makes this story both fascinating and unpredictable.
Written By Fazal Ul Vahab C H
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