Russian Urals oil prices for July shipments to India firmed this week due to lower supply and pricier alternatives, but remained below a price cap imposed by western nations, according to three traders familiar with the matter.
The Group of Seven countries (G7), Australia and the EU imposed a $60 per barrel price cap on Russian crude oil shipments on Dec. 5 as part of broader sanctions on Russia.
The policy allows Urals oil cargoes trading below the price cap to be shipped and insured by Western companies.
Urals oil cargoes loading in July for delivery to Indian ports traded this week at minus $8-9 per barrel to dated Brent, a discount some $1-2 per barrel narrower than recent estimates, the traders said.
That puts Russian oil’s discount to dated Brent at its smallest since it hit an all-time high last spring amid sanctions.
At least two deals for Russian oil were done at a discount of $8.10 to $8.20 per barrel to dated Brent for delivery on India’s west coast, one of the traders said.
The other two traders said there had been deals for July cargoes done at closer to minus $9 per barrel.
Freight rates for July cargoes from Baltic ports to Indian destinations fell to $6 million per shipment, down from $6.1-6.4 million two weeks ago, lifting profitability for Russian oil suppliers, two traders said.
On Tuesday, the calculated Urals price on a free-on-board (FOB) basis in Baltic ports, where the price cap applies, was at $55 per barrel for cargoes loading in July, up from recent estimates, Reuters calculations show.
By 1143 GMT, Brent crude futures LCOc1 were down $1.36, or 1.8%, at $72.82 a barrel.
Urals oil differentials in Indian ports firmed as Saudi Arabia, along with other Middle Eastern states and Iran, which is also under sanctions, lifted prices for its July oil for Asian buyers.
Russian oil exports in July are expected to be in line with or lower than in June as its domestic refiners are increasing throughput to supply fuel to the home market.
Source: Reuters (Reporting by Reuters reporters in Moscow and Nidhi Verma in New Dehli; Editing by Jan Harvey)