Russian oilImage Credit source: ai generated
Russian oil, which was once the first choice for Indian refineries, has now changed its course. The recent trade deal between India and America has created problems for Russia, of which neighboring country China is now taking direct advantage. Due to American pressure and the condition of exemption in tariffs, India has reduced the purchase of Russian oil, after which Russia has opened the mouth of its treasury to its old friend China.
China has become a bat-bat
At the root of this whole matter is a big trade agreement between India and America. America has reduced the tariff on goods coming from India, but there was a big condition hidden behind it. Washington had made it clear that this exemption would be available only if Delhi stops or significantly reduces the purchase of crude oil from Russia.
Under the agreement, India now has to turn to countries like America and Venezuela for its energy needs. Its effect has also started being visible on the ground. Indian refineries which used to be filled with cheap Russian oil, are now silent. As soon as India withdrew, it became necessary to find a new buyer for the oil reserves being accumulated by Russia, and in such a situation China has emerged as a big helper.
Moscow gave huge discount to Dragon
Russia has left no stone unturned to woo China to compensate for the loss caused by India’s indifference. Reuters report shows that Russia has drastically cut oil prices for China. The situation is that if India pulls out completely, China will remain the only major buyer of Russian oil.
This is a very critical time for Russia, which is struggling with the sanctions of Western countries. Its oil is being stored in ships and there is a hurry to sell it. Due to this frustration, Russia has increased the discount on oil exports to China. This week, the discount on Russian ‘ESPO Blend’ oil sent to China has increased to about $9 per barrel, which was earlier $7-8. At the same time, ‘Urals’ grade oil, which often comes to India, is getting a discount of about $ 12 per barrel.
Dragon is making record breaking purchases
China has lost its all in the flowing Ganga of cheap oil. Statistics bear witness that January 2026 has proved to be the biggest month in the history of oil trade of Russia and China. According to Kpler data, China imported a record 1.7 million barrels of oil every day from Russia by sea in January. At the same time, some other reports are putting this figure at 18.6 million barrels per day, which has broken all the records of last year.
China’s independent refiners are making the most of this opportunity. By purchasing this oil which is available at huge discount, they are not only increasing their earnings but are also strengthening their strategic reserves. The situation is such that Chinese companies have reduced the purchase of oil from Iran due to cheap Russian oil.
Are the doors closed for India?
Now the question arises whether India will completely stop buying Russian oil? JP Morgan analysts believe that this is not entirely possible. He estimates that despite American pressure, India will continue to buy about 8 to 10 lakh barrels of Russian crude oil every day. This quantity will be about 17 to 21% of India’s total oil imports.
However, this figure is much less than in June last year, when India was buying 2 million barrels of oil every day. In January it has fallen to 11 lakh barrels, which is the lowest level since November 2022.