OIL: Urals crude Discount Widening

The discount for FOB Urals to Dated Brent has started to widen amid additional sanctions on Russian energy, according to Interfax citing Argus data.

• The Urals discount to Brent has widened from $11.85-$12/b at the start of January to as much as $14.1/b by Jan. 16.
• However, Urals DES prices to West Coast India and Shandong have not yet shown any movements in discounts.
• For FOB Kozmino loading ESPO, the discount to the Dubai benchmark widened by $2.4/b on the day to a $4/b discount as of Jan. 16.
• Russian grades are expected to face downward pressure as additional US sanctions announced Jan. 10 hit the fleet of tankers used to transport these grades.
• Vortexa said that the most likely scenario is that Russian crude exports will face serious logistical difficulties amid a scarcity of available tankers, forcing them to sell crude below the G7 price cap.
• At that point, Western vessel operators could become involved in the Russian trade.