Why Russia’s Urals Crude Discount Is Widening Again

That matters because sanctions do not just affect the headline price. They reduce the pool of willing buyers, raise compliance risk for refiners and traders, and can force sellers to compensate buyers for taking barrels that are more complicated to finance, ship or resell. One analysis described sanctions and market fragmentation as pushing Russian trade into costly “shadow fleet” logistics and eroding revenue through compliance penalties .

India’s demand is less dependable

India became a major outlet for Russian crude after Western sanctions reshaped trade flows, but recent reports show that Indian demand can weaken quickly when sanctions scrutiny intensifies. Reuters reported that February Urals cargoes delivered to Indian ports traded at about $10 a barrel below Dated Brent, a $3–$5 wider discount than autumn deliveries and close to the widest since 2022, amid intensified Western sanctions pressure .

Other reporting described Indian and Chinese refiners cutting purchases after fresh U.S. sanctions on major Russian producers, with Urals discounts widening as a result . When a buyer as large as India becomes less predictable, Russia has to compete harder for the remaining demand.

China has more leverage

As India’s role becomes less certain, China gains bargaining power. Reports in early 2026 said Russian sellers were preparing to increase discounts on Urals delivered to China by $2–$5 a barrel from levels around $10–$12 in order to keep exports flowing . Another report said Russian crude discounts to China had hit record levels as sellers chased demand amid uncertainty over India’s future purchases .

The cost of that leverage is visible in revenue estimates. The Moscow Times cited Gaidar Institute analysts as estimating that discounts granted to Chinese refiners cost Russian oil suppliers $2.2 billion in 2025, even as global oil prices rose .

A global oil rally does not erase the Russian risk premium

Oil-market volatility can lift Brent and Urals at the same time, but it does not automatically narrow the spread between them. Rigzone reported that Urals from Russia’s western ports was still trading at about $30.9 a barrel below Dated Brent during a global oil rally driven by Middle East escalation, the widest gap since April 2023 .

That distinction is important. Another report said Urals delivered to Indian ports rose to $98.93 a barrel as Middle East conflict tightened global supplies . In other words, the absolute price of Urals can rise with the market while the discount to Brent remains wide if buyers still demand extra compensation for Russian-specific risks.

Quality matters, but it is not the main story

Urals’ heavier, higher-sulfur profile helps explain why it usually trades below Brent, but it does not explain a $30-plus spread. The normal quality discount cited by one market-data source was only about $1–$3 a barrel before sanctions, while post-2022 sanctions and redirected trade flows have pushed the spread much wider .

So the current discount is best understood as a sanctions and market-access discount layered on top of the usual quality differential.

Why the discount matters

A wider Urals discount directly affects Russia’s oil revenue. Reuters-linked reporting noted that lower oil prices hit Russia’s government budget and said state oil and gas revenues fell 24% in 2025 to their lowest level since 2020, according to Russian Finance Ministry data .

For the broader market, the takeaway is that Brent volatility and Russian crude pricing can diverge. Brent reflects global supply-demand stress; Urals also reflects whether enough buyers are willing and able to handle sanctioned Russian barrels. Right now, that second factor is doing most of the work.