Discounts on Russia’s Urals crude against the dated Brent benchmark have widened to their largest since early 2022, driven by tougher Western sanctions and falling demand from key buyer India, Reuters calculations based on traders’ data show.
Western nations have stepped up pressure on Moscow’s energy exports as part of efforts to push Russia toward peace talks over Ukraine.
Reuters estimates put the discount on Urals cargoes for delivery to Indian ports at about $21.50 per barrel on a free-on-board (FOB) basis from Russia’s Baltic ports of Primorsk and Ust-Luga, and around $20 from Novorossiysk.
That values Russian crude at roughly $40 per barrel at loading ports - among the lowest levels in years, compounded by a weak Brent price. The widening discount reflects weaker prices in India and China, Russia’s main buyers, and persistently high freight costs.
Discounts on Urals delivered to India’s west coast on a delivered ex-ship (DES) basis have jumped to $7 per barrel or more, from $1-$2 in August, traders said. Reduced Indian buying is forcing sellers to redirect cargoes to China, where prices are even lower.
"The discount on Urals on FOB basis at Baltic ports has reached $25-35 per barrel," said one Russian crude market participant. Another added: "If you assess Urals FOB prices based on the weakest market - China - the discount will be even wider."
Transporting a 100,000-tonne Urals cargo from Baltic ports to China costs more than $10 million, or at least $14 per barrel, industry sources said. At Chinese ports, the discount versus ICE Brent exceeds $10 per barrel.
Based on traders’ data and Reuters estimates, FOB discounts for deliveries to China may reach up to $35 per barrel, depending on supplier and deal terms.
(Reporting by Reuters. Editing by Mark Potter)
