Moscow/New Delhi — Russia is selling oil to India at nearly $80 per barrel, some $20 above the Western price cap, traders said and Reuters calculations showed, as tight global oil markets help Moscow generate strong appetite for its exports.
Russia’s main export grade Urals has been trading above the $60 per barrel Western price cap since mid-July amid output cuts by OPEC+ producers, including Saudi Arabia and Russia.
Calculated Free on Board (FOB) estimates for Urals cargoes loading from Baltic ports in October were close to $80 per barrel on Thursday for Indian customers, according to traders’ data and Reuters calculations.
“Russia has low inventory levels and their production is also cut,” said an official at an Indian refiner that regularly buys Russian oil, explaining the latest jump in prices.
“Urals prices are on the rise again. Alternatives are much more expensive and not easily available,” a trader familiar with the Russian oil market said.
Russian Urals oil typically gives higher yields of diesel, which accounts for about two-fifths of India’s overall refined fuel consumption.
Meanwhile, Russia’s decision to ban diesel and gasoline exports added to the appeal of Urals crude, amid a looming shortage of the products globally.
The Western price cap on Russian oil allows buyers to use Western services such as shipping and insurance in the event that crude trades below $60 per barrel.
Russian oil has drastically reduced the use of Western shipping and insurance companies since the imposition of the cap, which is also challenged by a spike in global oil prices towards $100 per barrel .
Turkey was the second biggest buyer of Urals oil cargoes in September, followed by China and Bulgaria, according to preliminary LSEG data. Russian oil is also now being sold to customers in new markets like Brazil, the Indian source said.
Reporting by Reuters, Nidhi Verma in New Delhi; Editing by Alexander Smith, Elaine Hardcastle – Reuters
