Chinese refineries are capitalizing on a decline in Indian demand for Russian oil, increasing their purchases for October and November delivery. This shift in the Asian oil market comes as Indian state refiners have temporarily halted their Russian oil purchases due to narrowing discounts.

India has emerged as a leading buyer of Russian seaborne oil, benefiting from discounted prices since some Western nations imposed restrictions following Moscow's invasion of Ukraine in 2022. However, Indian imports of Russian oil have recently decreased by approximately 600,000 to 700,000 barrels per day. This reduction in demand has created an opportunity for other buyers, and Chinese refineries have seized it by securing 15 Russian Urals cargoes. Each cargo contains between 700,000 to 1 million barrels of oil.

According to Kpler data, Urals shipments to China reached nearly 75,000 barrels per day in August, doubling the average since the start of the year. In contrast, exports to India fell to 400,000 barrels per day from 1.18 million previously.

The narrowing discounts on Russian oil, which deterred Indian buyers, have created an attractive opportunity for Chinese refiners. The price of Urals crude is trading at a $1 premium to Brent, keeping it competitive. However, analysts caution that China may not absorb all the additional Russian volumes, as Urals is not considered a baseload grade for Chinese state refineries. Chinese refiners will also be wary about the possibility of US secondary sanctions.

This situation has arisen against the backdrop of increased trade pressure from the US on India, including additional tariffs. While the US has increased trade pressure on India, President Trump has held off on raising tariffs against China, citing progress in talks with Russian President Vladimir Putin. White House trade advisor Peter Navarro has described India's buying as "opportunistic and deeply corrosive".

According to Energy Aspects, Chinese refiners have already booked 10 to 15 cargoes of Urals for October and November, which is above normal levels. Two Russian tankers, the Georgy Maslov and the Zenith, each carrying about 1 million barrels, are waiting to unload off China's coast.

Without Chinese buying, Russia could face steep price declines for Urals. For now, China is the main factor stabilizing Moscow's exports. The International Energy Agency projects that oil supply will outstrip demand by 1.76 million barrels a day in 2025 and by 3 million in 2026, limiting the impact of short-term disruptions linked to Russian exports.