The Discount Is Gone: How the Russian Barrel Lost India

Russian crude was 56% of India’s oil imports in July. By September, barrels loaded at Baltic ports were being offered at a premium to Brent — and the share was down to around a third. The trade that defined India’s refining economics for four years is unwinding on price, not policy.

For four years the world’s largest oil trade was a spread. Russia, needing buyers after 2022, sold at a discount; India, needing crude, bought. In July 2026 that trade peaked. On Kpler’s tracking, Russian inflows averaged 2.65 million barrels a day that month and accounted for as much as 56% of India’s crude imports; a reported high of 2.8 million barrels a day also circulates for the same month. An average cannot exceed the month’s peak, so we read 2.8 million as the intra-month high and 2.65 million as the monthly average, and use the average.

Two months later it was a different market. Russian imports fell to about 1.74 million barrels a day in September, 34.3% below July, from 2.02 million in August. A separate Kpler read of the same month put September flows near 1.9 million. The gap matters because of the denominator. India’s total crude imports rose by roughly 600,000 barrels a day in September, to about 5.3 million, on stronger refinery runs — tracking data shows the barrels simply came from somewhere else.

Against that import book, 1.74 million barrels a day is a 32.8% Russian share and 1.9 million is 35.8%. The “around 35%” quoted for September sits at the upper end of that band. Pheonix Research puts September’s Russian intake at 1.74–1.90 million barrels a day, or 33–36% of India’s imports — a range, because two tracking reads of the same month differ by 160,000 barrels a day, and we would rather publish the band than pick whichever end reads better.

One number in this trade does not fit that band, and we are not going to pretend it does. Tanker-tracking compiled by Bloomberg put Russian shipments to India at a four-week average of just 310,000 barrels a day in the four weeks to 4 October, the lowest since March 2022. At 5.8% of India’s September import volume, that cannot be describing the same aggregate as a 33–36% share measured over almost the same weeks. One of the two is a narrower slice of the trade, or the two houses are measuring different points of the same pipeline. Our reading is that the figure describes where purchasing is going rather than where September arrivals stood — Indian refiners have cut Russian nominations for November delivery as Urals approaches parity with Middle Eastern grades. We use it as a forward signal, not as a September level.

The volume did not fall. The mix did

Iraq supplied about 575,000 barrels a day, up from 163,000 in August. Saudi Arabia supplied 566,000, from 347,000. The UAE 480,000. Pheonix Research calculates those month-on-month increases at 252.8% for Iraq and 63.1% for Saudi Arabia from the levels above. The percentages published by The Indian Express for the same month — 238.2% and 56.2% — imply a slightly higher August base of roughly 170,000 and 362,000 barrels a day, so the two reads differ in the base rather than in the direction of travel. The three largest Gulf suppliers together took 30.6% of India’s imports on our calculation; the 36.7% published for West Asian suppliers as a group includes Kuwait, Qatar and Oman on top of those. February’s 56.3% remains the high-water mark, because the Gulf was only partly available for most of the year.

The spread inverted

What changed first was the price. In January 2026, Urals cargoes for February delivery were trading at discounts of about $10 a barrel to Dated Brent at Indian ports — close to the widest discount on record. By early October, Urals loaded at Baltic ports was being offered at premiums above $10 a barrel over Dated Brent, putting it close to the cost of competing Middle Eastern grades. A trade that existed because Russian crude was cheap stopped existing because it was not.

Four things produced the inversion. The United States sanctioned Rosneft and Lukoil in late 2025 and added 25% to tariffs on Indian goods, a measure it linked directly to Russian oil purchases — the same tariff politics now running through two live Section 301 proceedings. Chinese refiners, short of Iranian barrels during the Strait of Hormuz disruption, competed harder for the same cargoes. Ukrainian strikes on Russia’s oil and gas infrastructure reduced export availability as Moscow prioritised its own refineries. And Gulf supply recovered: Kpler estimates Middle Eastern crude and condensate exports averaged around 16.5 million barrels a day, while shorter voyages to Indian ports cut freight costs and delivery times.

The statutory risk grew at the same time. Public Law 119-111, the Sanctioning Russia and Iran Act of 2026, reported signed on 18 September 2026, directs the President to raise duties to as much as 100% ad valorem on goods from countries that make new purchases of Russian crude or gas and rank among the five largest importers of it — a category India is in. The initial determination was due within 30 days of enactment, with reviews every 180 days after, and the rate is explicitly adjustable as a country’s behaviour changes.

What refiners did

Refiners moved before the statute did. Mangalore Refinery and Petrochemicals, which sells fuels into Europe, has taken no Russian crude since November 2025, on the calculation that access to high-value export markets is worth more than the discount. Reliance Industries — whose Jamnagar refinery is export-only and which has the longest-standing Russian supply relationship in the country — received no seaborne Russian cargo in January, and has since secured a US licence to buy Venezuelan crude. The Centre for Research on Energy and Clean Air, which tracks these flows, notes that Indian purchases fell after earlier sanctions and recovered once waivers were granted. A retreat driven by price and risk can reverse the same way.

The strategic point of the past four years is that India’s discount was not a market structure. It was a sanctions artefact, and it lasted as long as the sanctions made Russian barrels unsellable elsewhere. India remains one of Russia’s two largest buyers — Russian crude was still around a third of September’s imports — but the trade has stopped being an arbitrage and become a supply decision, made on refinery compatibility, freight and the risk of losing a market rather than on the size of the discount. For India’s refiners that is a worse trade to run and a healthier one to be in.

Pheonix Research covers oil & gas, including the crude oil segment and the global Oil, Gas & Energy market — USD 7.8 trillion in 2025 to USD 11.2 trillion by 2033 at a 4.6% CAGR — and published its 2026 market outlook press release on that report. The European rule that prices the molecule rather than the barrel is the subject of The Molecule Doesn’t Have a Passport, and the agreement due to be signed on 16 December leaves that rule where it is: Sixteen December: What the EU–India Trade Deal Opens, and What It Leaves Closed.