Platts launches European Sour Crude Index as Urals substitute

18 Aug 2022

Quantum Commodity Intelligence - Price reporting agency S&P Global Platts has launched the Platts European Sour Crude Index, effective 17 August, as a replacement for the long-standing flagship Urals quote.

Platts said the assessment is made up of a weighted average of three of the North Sea's higher-sulfur crude streams, namely Johan Sverdrup, Grane, and Flotta Gold.

"The North Sea is a mature and largely low-sulfur crude oil basin but these three sourer grades will provide a further price point for similar grades in the region," said the statement.

Platts also noted "strong support" for the addition of a new European Sour Crude Index, after the sharp drop in Urals crude values seen since the February 2022 Russian invasion of Ukraine, which prompted self-sanctioning from many energy companies, as well as official sanctions from the US and European Union.

Brokers told Quantum there had not been any bids or offers for Urals in the Platts market-on-close assessment window since March, largely eroding transparency for the grade, which has been trading at steep discounts to the North Sea Dated Brent benchmark.

"Urals crude oil has long been transparently assessed through the Platts Market on Close assessment process, which shows bids, offers and transactions of cargoes publicly and clearly," noted Platts.

"The new trading environment for Urals crude has led to lower values versus benchmark Dated Brent, values which are not necessarily replicable in grades free of legal sanction."

While never making it as primary benchmark, Urals was viewed as the key indicator for medium sour crudes trading in Europe, and closely watched by Middle East producers selling competing grades into the region.

The weighting of the grades in the European Sour Crude Index reflects standard loading programs and is as follows: Johan Sverdrup: 65%, Grane: 30%, Flotta Gold: 5%.

Platts announced earlier this month it would expand a ban on the inclusion of trade data on Russian cargoes and barges in its European benchmarks from diesel and gasoil to other key refined products.

Rival PRA Argus launched its Urals alternative on 1 August, referred to as the Argus Brent Sour. The ABS will reflect the lowest value of the North Sea grades Johan Sverdrup, Grane, Flotta Gold, Brent and Forties.