Russia is selling its crude oil at record discount rates as the country prepares for the possibility of tough sanctions from Western nations following the beginning of its war with Ukraine.
The crude oil from the oil-rich Ural Mountains region was offered at $11.60 a barrel below Dated Brent, which is one of several internationally recognized benchmarks for assessing the price
Bloomberg reporters Sherry Su and Alex Longley noted that this is the deepest discount for Russian oil in at least 11 years, if not longer. Despite the significantly cheaper oil price, there were no bids. A large tender that was put up for sale separately also went without being bid on. (Related: Germany halts Nord Stream 2 pipeline project with Russia over Ukraine incursion, putting citizens at risk of freezing.)
Singaporean commodities trading company Trafigura Group and Russian energy company PJSC Lukoil both tried to offer Urals crude with a $6.30 per barrel discount. Neither of their bids ended up getting sold.
Russian oil isn’t the only oil market being affected. Kazakhstan-owned Caspian Pilepine Consortium Blend oil, which harvests oil from Caspian Sea reserves, tried to trade oil with a discount of $1.50 per barrel.
Norway’s Johan Sverdrup oil, which is similar in quality to oil from the Urals and is often used as an alternative, has also started trading oil at a discount of around $1.50 per barrel as well.
“Russia-U.S. tensions over Ukraine have contributed to the collapse in Urals differentials,” wrote energy consulting company Facts Global Energy in a note. “It seems that after many European refiners went on a Urals buying spree in December/January, those that have a choice are now shying away from Urals.”
Companies with investments in Russian oil started offering discounts on Monday when Urals oil was offered at Dated Brent minus $4.60 per barrel. Analysts noted that this was the largest discount on Urals oil since the spring of 2020, when oil demand plummeted at the beginning of the global Wuhan coronavirus (COVID-19) pandemic lockdowns.
Traders avoiding handling Russian oil for fear of sanctions
The United States, the United Kingdom, Japan and the European Union have all announced sanctions against Russia and have warned of more sanctions to be passed in the coming days if the war continues. Because of this, oil traders are actively choosing to avoid trading in Russian crude for fear that they might face the consequences of violating the sanctions.
Igho Sanomi, founder of Nigeria-based energy trading company Taleveras, said he is expecting restrictions against Russia to be “very deep.”
“We’re expecting most European banks will pull out of financing any commodities from Russia. Letters of credit are being stopped, financing in general toward Russian commodities is being stopped,” he said.
“I hear that refiners are stepping back from buying Urals, and many shipowners are saying they are unsure if they will call at Russian ports – Black Sea or Baltic,” said one European refineries investor to S&P Global. Another trader from the Middle East reportedly told the outlet that “extreme events” like open conflicts did not happen very often but were very disruptive to the market.
Reluctance to purchase Urals oil also comes from the fear many traders have of the oil they purchased being disrupted en route, especially if the ongoing conflict in Ukraine spills over into the Black Sea. Some shipowners have told media outlets that they are extremely cautious about traveling to terminals in the region.
S&P Global Platts, which organized the bid for Urals oil at a discount of $11.60 per barrel, remarked that it will not publish bids, offers, trades and market values for oil loading in the Black Sea.
But if Platts does end up selling oil at that steep discount, it may do at a massive loss as foreign rates from Russia’s Baltic Sea terminals have soared since the beginning of the conflict, according to the Baltic Exchange in London.
“Buyers are looking to source crude from safe suppliers,” said Lars Barstad, CEO of the management unit of Frontline Ltd., one of the world’s largest owners of supertankers. He added that the markets for supertankers are similarly reacting to the conflict and the increased rates out of the Black Sea.
Traders that used to rely on Russian oil are now looking for suppliers in the Middle East, West Africa and Brazil. Barstad has seen this development due to the rise in rates for chartering giant supertankers like the ones his company is renting out.
But financial analysts noted that the lack of trading partners with the West provides an opportunity for other potential trading partners to step in.
Financial analysts have noted that Russia’s sudden lack of trading partners with the West provides an opportunity for other potential trading partners to step in and buy Urals oil.
“The conflict will result in a significant shift in trade flows, at least temporarily, with less risk-averse Asian buyers stepping in to buy Urals and Russian products,” said Livia Gallarati, an analyst for energy consulting company Energy Aspects Ltd. “Which means Urals and products differentials have to correct lower to clear east.”
More related stories:
- Ukraine failed to prep, now having to ration gasoline as citizens desperately try to flee Kiev.
- Biden regime blames Russia-Ukraine conflict for rising inflation, deflecting from the many decades of corrupt monetary policy that actually caused it.
- State and federal regulations cause gas prices to surge in California.
- Russia-Ukraine crisis will put even more strain on the global food supply, driving up prices of wheat and corn around the world.
- Rising gas prices to hit $7 a gallon if crude oil cost spikes and tension between Russia and Ukraine escalates.
- Listen to this episode of the “Health Ranger Report,” a podcast by Mike Adams, the Health Ranger, as he talks about the real story regarding Ukraine, Russian President Vladimir Putin and NATO.
This video is from the Health Ranger Report channel on Brighteon.com.
Sources include:
Most “Conservative” News Outlets Are on the Big Tech Teat
Not long ago, conservative media was not beholden to anyone. Today, most sites are stuck on the Big Tech gravy train.
I’ll keep this short. The rise of Pandemic Panic Theater, massive voter fraud, and other “taboo” topics have neutered a majority of conservative news sites. You’ll notice they are very careful about what topics they tackle. Sure, they’ll attack Critical Race Theory, Antifa, and the Biden-Harris regime, but you won’t see them going after George Soros, Bill Gates, the World Economic Forum, or the Deep State, among others.
The reason is simple. They are beholden to Big Tech, and Big Tech doesn’t allow certain topics to be discussed or they’ll cut you off. Far too many conservative news outlets rely on Google, Facebook, and Twitter for the bulk of their traffic. They depend on big checks from Google ads to keep the sites running. I don’t necessarily hold it against them. We all do what we need to do to survive. I just wish more would do like we have, which is to cut out Big Tech altogether.
We don’t get Google checks. We don’t have Facebook or Twitter buttons on our stories. We don’t have a YouTube Channel (banned), an Instagram profile (never made one), or a TikTok (no thanks, CCP). We’re not perfect, but we’re doing everything we can to not owe anything to anyone… other than our readers. We owe YOU the truth. We owe YOU the facts that others won’t reveal about topics that others won’t tackle. And we owe America, this great land that allows us to take hold of these opportunities.
Like I said, I don’t hold other conservative sites under too much scrutiny over their choices. It’s easy for people to point fingers when we’re not the ones paying their bills or supporting their families. I just wish there were more who would make the bold move. Today, only a handful of other major conservative news outlets have broken free from the Big Tech teat. Of course, we need help.
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We are also building partnerships with great conservative sites like The Liberty Daily and The Epoch Times to advance the message as loudly as possible, and we’re always looking for others with which to partner.
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We know we could make a lot more money if we sold out like so many “conservative” publications out there. You won’t find Google ads on our site for a reason. Yes, they’re lucrative, but I don’t like getting paid by minions of Satan (I don’t like Google very much if you couldn’t tell).
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