India pushes Moscow to increase oil discounts fivefold – Reuters

Buyers stated that the discount must expand to approximately 10 dollars per barrel to the price of Brent, to correspond to the price ceiling. Banks strengthened checks because of discrepancies between the policies of the USA and the EU regarding Russian oil. For comparison, in September discounts amounted to only 2-3 dollars per barrel.

Some Russian sellers stated that the demands of the Indians are too large. According to them, part of the October supplies may go to China, which will lead to a reduction of volumes for India.

Reduction of supplies in October

According to data from a source familiar with the shipment schedule, in October, the volume of Russian oil supplies to India is expected to reach approximately 1.4 million barrels per day. For comparison, in August, it was 1.5 million barrels, and in September, it was 1.6 million barrels.

Final figures will become known after the completion of negotiations in the coming two weeks. At the same time, even a discount of 10 dollars will not make it possible to lower the price below the new ceiling of the EU and Great Britain at 47.60 dollars per barrel.

Discrepancies in sanctions policy

From October 1, the EU lowered the ceiling of prices for Russian oil from 60 to 47.60 dollars. Insurance and transport services of Western companies are allowed only upon observance of this level. The USA did not support this decision. Last week, Brent traded at 67 dollars per barrel.

The European Commission intends in the future to achieve coordination of the new price ceiling with all countries of the G7. According to the words of a representative of the European Commission, the restriction remains relevant, since Western carriers, as before, take part in the transportation of Russian oil.

"A growing split on oil sanctions policy will further increase confusion for market participants and potentially weaken levels of compliance," stated Tom Boton from the consulting company S-RM.

Russia actively uses the so-called shadow fleet – tankers with Russian connections and insurance arranged inside the country. Such transportations do not fall under the action of the price ceiling.

Evasion of restrictions

Russian companies, since 2022, have successfully bypassed price restrictions, using their own fleet or forgery of documents, say traders and analysts. Weak control over sanctions stimulates participants of the market to ignore prohibitions, not fearing punishment.

"Poor sanction enforcement has encouraged traders to push boundaries or ignore sanctions altogether as they do not fear penalties," noted partner of the consulting firm PRISM Strategic Intelligence Benjamin Godwin. "Both the US and EU could make serious moves to choke Russia’s oil and gas industry, but they would be extremely disruptive to global economic activity," he added.

Role of the USA and tariffs of Trump

Discrepancies between the USA and the EU regarding the export of Russian oil to India will lead to a reduction of supplies in October, analysts believe. After the invasion of Russia into Ukraine, the countries of the G7 introduced sanctions and banned insurance and sea transportations of oil at prices more expensive than the price ceiling.

Restrictions were aimed at lowering the revenues of Russia while preserving supplies, so as not to allow a jump of prices. This scheme in fact stimulated India and China to buy oil with a discount.

However, President Donald Trump of the USA changed the approach. He demanded that India completely refuse purchases of Russian oil, and after receiving a refusal, raised tariffs on Indian exports to the USA to 50%. Thus, Trump uses trade pressure in order to force Moscow to go to peace in Ukraine.

"Sanctions coordination between the US and the other G7 nations does seem to have largely broken down under the Trump administration," stated head of the geopolitical department of Energy Aspects Richard Bronz.

At the same time, head of the European Commission Ursula von der Leyen reported that the EU is considering an accelerated refusal of Russian energy resources within the framework of new sanctions. In Washington, negotiations are already underway with the participation of the EU's special representative regarding sanctions.