Holding its ground: Urals crude is surviving on the global market despite sanctions
Three and a half years of sanctions and embargoes have failed to push Russian crude off the global market, even if the combination of measures has widened the price gap between Urals and global benchmarks to around $25. Still, amid a shortage of tankers and soaring freight costs, Urals cargoes are once again being transferred at sea onto supertankers.
Urals crude oil, produced in Russia's Ural Mountains region, is still being delivered globally despite international sanctions. Ship-to-ship transfers to VLCC tankers have resumed, driven by increasing demand from China, limited tanker availability, and high freight costs. Supertankers are becoming more accessible following the reduction in shipping through the Strait of Hormuz and eased sanctions on Venezuela.
Shipping Urals to China via the Suez Canal costs around $20 per barrel, slightly more than the route to India. The grade's name originates from the historic oil-producing area, though it is primarily sourced from Western Siberia and the Volga-Ural basin, with Transneft managing the pipelines that blend light and heavy, low-sulfur and high-sulfur crude.
Urals has been exported since the 1960s, serving as a practical solution for shipping diverse crude grades to various buyers. It has become a fiscal backbone of Russia's oil industry, with its price used to calculate the mineral extraction tax and export duty. The blend is tailored for European refineries, but Russia's reliance on these markets has diminished following the invasion of Ukraine.
From 2023 onward, the Urals price methodology has shifted to FOB assessments at Indian ports, relying on a weighted average of FOB assessments at Primorsk and Novorossiysk, and the ESPO FOB Kozmino assessment. This change acknowledges the absence of a genuine Urals market in Europe.
Written by urgent.news from The Insider's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
