Whalesbook
Russian Urals crude oil has fallen to a discount against dated Brent at key Asian ports in India and China. This marks a significant shift from earlier this year when the grade commanded a premium.
Asian Demand Falters
Four trade sources confirmed the change, attributing it to a decline in demand from Asian refiners. Urals, Russia's primary oil export, had been trading at a premium since March. This was driven by Middle East supply disruptions and increased demand for cheaper oil alternatives.
However, that trend has reversed. Sources indicate that Asian refiners have depleted their existing inventories. Additionally, they have secured alternative crude supplies and, in some instances, reduced their processing operations. This confluence of factors has weakened the market for Russian Urals.
Price Plunge
Cargoes of Urals scheduled for delivery to India in July and August are now trading at discounts of $2 to $3 a barrel to dated Brent. This is a dramatic drop from April and May, when the grade fetched premiums of $7 to $8 a barrel. Last year, during the June-August period, discounts were in the range of $1 to $3 a barrel. The current situation mirrors the deeper discounts seen during the northern hemisphere winter, when U.S. sanctions had previously impacted Russian output.