Russia shifts Urals oil to China after India tariffs

Barrels of Russia's Urals crude are being offered at a discount to Chinese refineries as tariffs on India push flows east.

Russia redirects Urals oil to China after Indian tariffs

Russian oil firms are moving shipments of Urals crude from India to China, with deliveries planned for October from western ports. Prices have been cut by about $1 per barrel as traders linked to the Kremlin offer discounts to both state‑run and private Chinese refineries. The shift comes after the White House imposed a 25 percent tariff on Indian imports over New Delhi’s energy ties with Moscow, with a prior 25 percent tariff taking effect on Aug 1. Beijing has emerged as a key buyer even as it maintains a stance of political neutrality in the Ukraine crisis, while Washington warns of further penalties if Moscow keeps its war going.

Traders tied to Litasco, the trading arm of Lukoil, are cited as among those offering discounts. India, which rapidly expanded Russian oil purchases after the 2022 invasion, has become a major seaborne supplier, though Indian refiners have started to reassess purchases amid tariff pressures. Indian officials have instructed oil firms to prepare alternative supply plans as the country navigates energy security and price volatility while U.S. policy aims to squeeze Moscow’s oil revenue, which funds a large share of Russia’s federal budget.

The move signals a realignment of global oil flows in response to Western policy arms. Even as China positions itself as a neutral buyer, it gains leverage as Russia seeks to sustain revenue in a tougher sanctions climate. For India, the tariffs complicate supply planning and test its ability to diversify away from Russian crude without triggering security or price risks. The episode underscores how tariff threats can push buyers toward East Asian markets and how Moscow is prepared to offer price incentives to keep volumes steady. In the longer run, the pattern may erode Western efforts to isolate Moscow financially and geopolitically, while sharpening East‑West energy dependencies.

Highlights

Energy markets follow the compass of policy as much as the demand for fuel.