Russia sells oil at a loss due to discounts for China and India
Russia has started selling oil at significant discounts to China and India, as a result of which extraction has become unprofitable for some companies, Reuters reports .
Illustrative photo. Photo: "Nasha Niva"
According to analysts, the price of Russian Urals last week fell to $33-34 per barrel in Baltic and Black Sea ports — the lowest since the pandemic, with a discount to Brent reaching $27 per barrel. Some supplies for Chinese refineries were sold at a discount of $35 per barrel, effectively at half price.
As a result, the oil industry found itself on the verge of profitability, and some projects are already operating at a loss. However, fields benefiting from a preferential mineral extraction tax rate remain profitable. Profitability also depends on geographical location and extraction complexity: fields with large reserves and close to pipelines withstand, while remote and complex fields incur losses of up to $5 per barrel.
Overall, the oil industry remains profitable, but the profit is very small: about $3 per barrel remains for investments in future extraction, drilling, and field maintenance. Sanctions, which have deprived companies of access to Western equipment, exacerbate the crisis.
In the first half of 2025, Rosneft's profit decreased threefold, Lukoil's by twofold, Gazprom Neft's by 54%, and Surgutneftegaz became unprofitable. Oil and gas budget revenues for January-November decreased by 21%, and in December, according to Reuters calculations, they will be the lowest since August 2020.
The Russian budget for 2026 was planned on the assumption that Urals would cost $56 per barrel, but the actual price is a third lower, which threatens a large shortfall in oil and gas revenues in January.
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