Russia has said it will not abide by the cap even if it has to cut production
\n NEW DELHI
\nRussia\u2019s flagship Urals crude has been sold at deeper discounts this month following a European ban on Russian oil imports, and dominant buyer India has bought barrels at well below a $60 price cap agreed by the West, four market sources said.
\nThe European Union ban on imports of Russia\u2019s seaborne oil from Dec. 5 has driven Moscow to seek alternative markets, mainly in Asia, for about 1 million barrels per day.
\nAlso on Dec. 5, the Group of Seven leading economies implemented a $60 price cap on Russian seaborne oil to try to limit Moscow\u2019s ability to finance its war in Ukraine.
\nRussia has said it will not abide by the cap even if it has to cut production.
\nThe Western actions have left Russian producers in fierce competition with each other and with suppliers from Asia, Europe and the Middle East, meaning their best hope of finding buyers is to lower prices, two traders said.
\nSince Russia began its invasion of Ukraine in February, India has become the main outlet for seaborne cargoes of Urals crude.
\nFor some deals this month, the price for Urals in Indian ports, including insurance and delivery by ship, has fallen to around minus $12-$15 per barrel versus a monthly average of dated Brent, down from a discount of $5-$8 per barrel in October and $10-$11 in November, the sources said.
\nThe discounts mean oil is in some cases being sold at below overall production cost including local levies, industry sources said.
\nThe pressure on producers has increased further at Russia\u2019s western ports because a shortage of vessels suited to Russian winter weather has driven up freight costs, which can be borne by the seller depending on the terms of deals agreed.
\nFreight rates have risen to between $11 and $19 a barrel compared with less than $3 per barrel before February and are roughly twice as much as in the middle of the year.
\nReuters calculations showed discounts for Urals oil at Russia\u2019s western ports for sale to India under some deals have widened to $32-$35 per barrel when freight is not included in the price.
\nThe value of the Dated Brent benchmark hovered below $80 a barrel early in December, while the estimated cost of Russian oil for producers including extraction, tax and transport costs to export ports stood around $15-45 per barrel, deputy energy minister Pavel Sorokin said last year.
\nRussian oil suppliers are trying to handle Urals oil transport to India themselves using their own vessels and shipping partners, which can reduce transport costs, traders said.
\nBut many oil producers still rely on trading firms, which means they have to share any profits they have.
\nIndia, the second largest consumer of oil in Asia, is better located to buy Urals than China because of a shorter transport route, and its refineries are well-suited to processing Russian oil.
\nIn addition, New Delhi recognise ships and insurance cover provided by the Russian entities, which are no longer recognised in Europe.
\nUrals supplies to India in November rose to at least 3.7 million tonnes and reached a record 53.2% of overall grade\u2019s loadings via sea ports last month, Refinitiv Eikon data showed.
\nRussia emerged as biggest oil supplier to India in November replacing Iraq, data obtained from trade sources showed.
\n\u201cThe market is full of Urals. There is plenty. Many traders are offering Urals cargoes for both December and January delivery,\u201d a source with an Indian refiner said. None of the sources could be named because they were not authorised to speak to the press.<\/p>\n","protected":false},"excerpt":{"rendered":"
Russia has said it will not abide by the cap even if it has to cut production NEW DELHI Russia\u2019s flagship Urals crude has been sold at deeper discounts this month following a European ban on Russian oil imports, and dominant buyer India has bought barrels at well below a $60 price cap agreed by […]<\/p>\n","protected":false},"author":2,"featured_media":301489,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[],"class_list":{"0":"post-301471","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-world"},"yoast_head":"\n