Prices for Russia’s Urals crude delivered to India have surged to their highest level since Moscow redirected its oil exports toward Asia following the 2022 Ukraine conflict. The delivered price of Urals crude on India’s west coast reached $98.93 per barrel on Friday, reflecting a sharp rise in global energy markets and tightening discounts on Russian barrels.

The rally comes as geopolitical tensions in the Middle East push global oil benchmarks higher. The conflict, now entering its third week, has intensified concerns over supply disruptions across key energy routes and has lifted international crude prices across the board. In this environment, Russian crude which has been heavily discounted since Western sanctions is also seeing stronger pricing power.

Data shows that the discount on Urals crude delivered to India narrowed to $4.80 per barrel versus Dated Brent, marking the smallest differential in more than four months. This contraction highlights the growing demand for Russian oil among Asian buyers and the tightening arbitrage opportunities that had previously made these cargoes significantly cheaper for refiners.

The shift in pricing dynamics also follows a policy signal from Washington. Last week, the US Treasury broadened a temporary authorization allowing countries to purchase Russian oil cargoes already at sea, extending a waiver that had initially been granted only to India. The decision appears aimed at easing global supply pressure as energy markets react to rising geopolitical risks.

This regulatory adjustment has had immediate commercial consequences. After receiving regulatory clarity earlier in March, Indian refiners stepped up purchases of unsold Russian cargoes. Market participants indicate that refiners including Indian Oil Corporation and Reliance Industries collectively secured around 30 million barrels of seaborne Russian crude, absorbing cargoes that were stranded in the market due to earlier uncertainty around sanctions compliance.

While the delivered price of Russian crude to India has surged, export prices at Russia’s western ports remain lower. Argus data indicates that Urals crude averaged $73.73 per barrel at Russian export terminals on Friday, the highest level since mid-July 2024. The difference between the export price and the delivered cost reflects freight, insurance, and trading margins. It remains unclear how much of this delivery spread ultimately accrues to Russian producers versus intermediaries in the trading chain.

For Russia, the higher oil price environment provides fiscal relief. The country’s federal budget for the year had assumed an average oil price of around $59 per barrel, meaning current levels are significantly above expectations. However, Russian President Vladimir Putin has cautioned domestic energy companies against assuming the rally will persist, warning that the surge in commodity prices is likely temporary.

From an Indian perspective, the development introduces a more complex energy equation. Over the past two years, discounted Russian crude became a cornerstone of India’s import strategy, helping refiners lower input costs and boosting export competitiveness in refined fuels. If the discount to global benchmarks continues to narrow, some of that advantage could erode.

Refining economics may therefore face pressure. Higher feedstock costs could squeeze margins for Indian refiners unless global product prices rise proportionately. At the same time, elevated oil prices could widen India’s crude import bill, potentially impacting inflation expectations and the country’s current account balance.

For energy markets, the narrowing discount also signals a broader structural shift. Russia’s oil trade has gradually stabilized after the initial shock of sanctions, with Asian buyers absorbing large volumes that previously flowed to Europe. As supply chains normalize, the extraordinary discounts seen in 2022 and 2023 are gradually shrinking.