Discounts on Russian Urals crude at loading ports have reached their highest level since April 2023. The reasons were increased oil supplies from the Middle East, weakening demand from Asian buyers, and high shipping costs.
This was reported by Russian media on November 13, citing data from the price agency Argus.
In the week to November 6, the discount on Urals relative to benchmark Dated Brent at Russia's Baltic ports increased to $31 per barrel, and in Novorossiysk - to $33. According to Argus, such large discounts have not been recorded since spring 2023.
Meanwhile, the price of Russian oil at loading ports fell sharply. In Primorsk and Ust-Luga, Urals dropped by $24.73 to $65.63 per barrel. In Novorossiysk, the decline was $23.93 to $63.63 per barrel. These figures reflect the overall fall in global oil prices.
One of the main factors worsening conditions for Russian exporters was the gradual restoration of supplies from Persian Gulf countries. This allows Asian refineries to increase purchases of alternative crude and reduce dependence on Russian oil.
The situation has changed particularly noticeably on the Indian market. According to Argus, Russian oil for delivery to India's west coast in December has fallen to $94.38 per barrel. Moreover, the premium to Dated Brent that existed previously has turned into a discount of $2.25 per barrel.
According to Kpler estimates cited by the publication, oil supplies to India via the Strait of Hormuz increased to 2.1 million barrels per day in November. This exceeds the imports of Russian crude, which stood at about 1.8 million barrels per day.
Additional pressure on Urals' competitiveness comes from expensive logistics. Although freight rates eased slightly in early November, shipping oil from Russia's Baltic ports to India and China still costs about $28.6–32.7 per barrel, depending on the route, according to Argus.
Earlier, Reuters reported that high transport costs and weakening demand from Indian refiners are forcing Russian oil sellers to offer better terms. Additional competition comes from Middle Eastern grades, which may be cheaper to ship to India.
Analysts note that a further recovery of oil supplies from the Persian Gulf could intensify competition for Asian buyers. For Russian exporters, this will mean the need to maintain significant discounts, which will limit their oil revenues.
