How India's rejection of Russian oil has opened unprecedented opportunities for China

The sharp turn in demand for Russian oil in 2025 created radical shifts in the global energy market. After Indian refiners reduced purchases of the flagship Russian grade Urals, the price gap between supply and demand reached a historic minimum, fundamentally changing the competitive landscape of energy resource supplies to Asia.

Why India Turned Away from Oil

For a long time, Indian refineries were the main absorbers of displaced Russian oil volumes, taking advantage of significant discounts amid Western sanctions. However, U.S. sanctions targeting major Russian producers — Lukoil and Rosneft — significantly complicated logistics and financial calculations. Although examples like Reliance Industries’ recent purchase indicate some continued interest, India’s overall appetite has noticeably cooled.

This trend was most clearly reflected in the volume of Russian exports. Oil supplies to India, the third-largest importer globally, fell to a three-year low at the end of 2025. This created a surplus of supply on the market, which needed to be urgently redirected to new buyers.

China Maximizes Profit from the Situation

The resulting dynamics exerted direct pressure on Urals pricing. Throughout the last week of December, supplies of the Russian grade traded approximately ten dollars per barrel below Brent futures quotes — an unprecedented discount, especially considering that as recently as August 2025, the same grade was offered with a one-dollar premium to Dated Brent. This opened an unexpected window of opportunity for Chinese refiners.

Traditionally, China mainly purchased the East Siberian ESPO grade, supplied from the Far East. However, the geographical remoteness of western Russian ports, from where Urals is exported, prevented competition in the Asian market. The situation changed dramatically with falling prices: it became economically feasible for Chinese refineries to buy oil from western Russia despite logistical costs.

Statistics clearly demonstrate the scale of this upheaval. According to Kpler, Urals imports to China in 2025 increased to approximately 400 thousand barrels per day — a record high. Similar trends are confirmed by Vortexa Ltd., an independent provider of information on global energy flows. Thus, Beijing became the main beneficiary of the reorientation of Russian oil from the Indian direction.