Russian Urals crude tumbles to record discount after Litasco offer

23 Mar 2022

Quantum Commodity Intelligence - Russian Urals crude differentials dropped by almost $1/barrel versus the underlying Dated Brent benchmark on Tuesday, falling to a new record low as buyers continue to shun Russian crude grades.

Russian Urals cargoes basis CIF Rotterdam were assessed at a new record low of Dated Brent minus $30.99/b and for CIF Augusta at Dated Brent minus $30.69/b on 22 March, according to S&P Global Commodity Insights.

Russia's Litasco offered a Baltic-loading cargo on a CIF Rotterdam basis, loading April 1-5, which was left outstanding at Dated Brent minus $31.35/b in the Platts Market on Close assessment process Tuesday.

By contrast, North Sea light sweet grades such as Forties, Oseberg and Ekofisk were valued at around Dated Brent +$5/b.

The usually opaque Urals MOC process, better known among traders as the 'window', made international headlines earlier this month after Shell snapped up a discounted cargo via the process, forcing the oil major to hasten its exit from Russia.

The S&P Global report said that despite the lack of interest in the prompt loading cargo there is renewed interest from Chinese buyers for heavily discounted Russian Urals cargoes.

Several Chinese state-owned refiners have returned to the Russian spot market to buy May-loading Urals crude, attracted by the record discounts to Dated Brent, refining sources told S&P Global.

"We will have a cargo of Urals for delivery in June, the price is quite low," a source with a state-owned refinery in southern China said.

However, Chinese buyers are still facing issues securing Russian Urals cargoes: "One of the current problems is fixing a ship to carry Russian barrels as not many shipowners are willing to take the risk," a refining source with PetroChina told Platts.

Meanwhile, French energy major TotalEnergies became the latest oil firm to say it would stop purchasing crude and oil products from Russia entirely by the end of the year.

On Tuesday, the French energy major said it would no longer enter into or renew contracts to purchase oil and petroleum products "as soon as possible and by the end of 2022 at the latest."