Insights 
VT 
In November, India’s Oil imports from Russia surged to a five-month high, reaching 1.86 million barrels per day. This increase comes amid expectations that US sanctions would lead to reduced imports from Russia.
The uptick is attributed to refineries purchasing more Oil ahead of the sanctions, which took effect on 21st November. A decline in imports is anticipated for December, potentially falling to 600-650 thousand barrels per day, marking the lowest levels in three years.
Russia’s Strategic Response
Russia plans to counterbalance India’s reduced imports by increasing Oil deliveries to China. However, some Chinese refineries also plan to decrease their Russian Oil purchases due to US sanctions.
A peace agreement in Ukraine could ease US sanctions on Russian Oil exports, potentially stabilising the market. This prospect has already influenced Oil prices, which have dropped with the increasing likelihood of an end to the Ukraine conflict.
We’ve seen India’s imports of Russian oil reach a five-month high of 1.86 million barrels per day this November. This appears to be a final surge of purchases before new US sanctions became active on November 21. For the coming weeks, this sets up a significant shift in trade flows.
The main expectation is for India’s Russian oil imports to collapse in December, potentially falling to their lowest level in three years at around 600,000 barrels per day. This suggests a potential widening of the spread between Brent crude and Russian Urals, creating an opportunity for spread trades. We saw a similar dynamic back in 2023 when the discount on Urals crude widened significantly after the initial G7 price cap was introduced.
Implications for Global Oil Market
This situation forces India to seek over a million barrels per day from other suppliers, likely putting upward pressure on global benchmarks like Brent. Traders should watch for increased purchasing from Middle Eastern sources, which could tighten the spot market and support call options on Brent futures for early 2026 delivery. According to the latest tanker tracking data, cargo bookings from Saudi Arabia and Iraq to India are already showing a slight uptick for December loading.
Russia will attempt to redirect these unwanted barrels to China, but reports suggest Chinese buyers are also hesitant. This uncertainty about where the supply will land is likely to increase market volatility. This makes options strategies that benefit from large price swings, regardless of direction, more appealing.
The wildcard remains a potential peace agreement in Ukraine, which would be bearish for oil prices as it could lead to sanctions being lifted. Recent market dips on peace rumors show how sensitive prices are to this possibility. Therefore, using put options as a hedge against a sudden price drop from a geopolitical breakthrough would be a prudent strategy.
