Russia’s Oil Price Plummets to $36 Per Barrel
The price of Russia’s flagship Urals crude at the Black Sea plunged to as low as $36.61 per barrel at the end of last week, the lowest in nearly three years, as the U.S. sanctions on the two biggest Russian producers and exporters, Rosneft and Lukoil, are slated to take effect from Friday.
On Thursday last week, the price of Urals loaded at the Novorossiysk port in the Black Sea slumped to $36.61 per barrel, before recovering slightly on Friday, according to data from Argus Media and Bloomberg. That’s the lowest Urals has traded since March 2023, when Russian crude prices plunged with the EU embargo on Russian crude oil imports.
The price of Urals loading from the Baltic Sea ports has also plummeted since the United States announced at the end of October sanctions on Rosneft and Lukoil. The sanctions sent Russia’s key buyers, China and India, scrambling for alternatives for fear of running afoul of the U.S. restrictions and being slapped secondary sanctions.
The discount of Urals at the Baltic Sea and Black Sea export terminals relative to the international Brent benchmark widened to an average of $23.52 a barrel at the end of last week, according to Argus data cited by Bloomberg.
The recent surge in the discount is the second time this year Urals has exceeded a $15 per barrel discount to Brent, after the Biden Administration’s last sanctions on Russia imposed in early January.
The widest discount was hit in 2022 and early 2023 – at over $30 per barrel below Brent, immediately after the Russian invasion of Ukraine and the introduction of a Russian oil embargo in the EU from 2023.
The widening discount of Urals will now weigh further on Russia’s oil revenues, the biggest budget income for the Kremlin to finance the war in Ukraine. October revenues for the Russian budget collapsed by 27% from a year earlier, as international oil prices dropped, sanctions on Russia intensified, and the Russian ruble strengthened.
By Michael Kern for Oilprice.com
