Russian Ural oil being traded at 50% below global benchmark price

Russia’s flagship oil is selling at a price point that is 50% below international prices following sanctions targeting the Kremlin’s revenue from petroleum sales.

The nation’s Urals grade, which is a far bigger export stream than any other crude that Russia sells, was traded at $37.80 a barrel at the Baltic Sea port of Primorsk on January 6, as reported by Bloomberg citing data provided by the analytical agency Argus Media, amid the global benchmark being at $78.57 on that same day.

According to Bloomberg, a key driver of prices has probably been the lost European market, as it put Russia at the mercy of a tiny pool of large buyers, most notably China and India. With tankers having to sail thousands of miles further to get cargoes from western Russian ports to those buyers, freight costs soared which forced barrels to be discounted to compete with shipments from the Middle East.

Argus provided data to the International Energy Agency, an adviser to developed countries that is monitoring Russian prices for the G7 block. The group is reviewing its previous cap, set on December 5 together with the EU, and will also impose one for refined fuels from February 5.

Argus’s figures have also been used in the past to help Moscow calculate duties for oil exports.