Once again the flagship crude of Russia was offered at deeper discount in Europe amid tensions over Ukraine. Vitol Group offered 1 lakh tons of the nation’s Urals oil for delivery to Rotterdam at $7.25 a barrel less than Europe’s benchmark for physical cargo transactions Dated Brent.
There were no bids in a window organized by S&P Global Platts. The grade had already been sold in a tender at $6 below the same measure and offered at minus $6.30. It is the largest discount in 11 years at least.
Before the escalations this week, Traders flagged that the discounting wasn’t just about the tension over Ukraine. Oil prices don’t favor purchases of the Russian grade. It is also more sulfurous than many other crudes that are popular in Europe, making it more expensive to process because high natural gas prices have driven up the cost of hydrogen that refineries use. Russia has also set out plans to export the most Urals oil from its western ports. Russia faces the threat of further sanctions from western nations following its recognition of two breakaway regions in eastern Ukraine. The President of Russia Vladimir Putin gave an order to deploy what he called ‘peacekeeping forces’ to the regions.
