Discount on Urals declined to Brent on falling freight

MOSCOW, 12 Sep — PRIME. The discount on Russian export oil Urals in relation to the benchmark grade Brent has fallen by about half over the past two months, to $20 per barrel, thanks to cheaper freight, said Denis Deryushkin, deputy director general of the Russian Energy Ministry.

“Due to the fact that the freight has fallen slightly and there are alternative consumers, today the discount on Urals is no longer $40, but $20. This is still a significant discount, a significant blow to the economy of mining companies, but in general, these are still comfortable realities, where you can exist,” Deryushkin said at the Baikal Risk Forum.

The $40 rebate was “a couple of months ago,” he said. The deputy head of the REA Ministry of Energy explained that the discount on Russian raw materials consisted of a significantly more expensive ship charter, lack of transaction insurance and the desire of banks to provide letters of credit.

Buyers of Russian oil have faced difficulties in logistics, chartering ships and insuring transactions after the introduction of new Western sanctions as a result of the special operation of the Russian Federation in Ukraine. In this regard, Russian Urals oil began to be steadily sold at discounts. For example, in July they were at the level of 32-35 dollars per barrel. And the cost of Urals itself this summer fluctuated in the range of about 70-90 dollars per barrel.