Urals crude discounts to Brent narrowed amid softening freight rates for key routes from Russia’s western ports to Asia, while outright prices for the grade dipped in line with the global oil market, traders said and Reuters calculations showed on Friday.
Freight rates for Aframax ships, which usually load around 720,000 barrels of Urals crude in Primorsk or Ust-Luga for a one-way voyage to Indian ports, eased to average around $7 million, down from $7.5 million for April and March-loading cargoes. This is still above the $5 million rate for the voyage last September.
Rates for Suezmax tankers, which usually load around 1 million barrels of Urals in Novorossiysk for delivery to India, eased by around $0.25 million to some $6.5 million per voyage, the sources added.
As a result, Urals differentials to dated Brent in northwest Europe firmed by around 70 cents per barrel to discounts above minus $13 per barrel, according to Reuters calculations. Discounts for 140-tonne Urals cargoes in the Mediterranean have narrowed by around 25 cents and stand above minus $10 per barrel to Brent.
Urals prices in Russia’s western ports have slipped recently despite firmer differentials of the grade, as Brent lost more than $10 per barrel of its value since mid-April. Urals price estimates in Russian ports over the last few days hover around $65 per barrel, still above the western price cap of $60 per barrel.
Freight rates for vessels carrying Russian Urals crude have eased despite U.S. sanctions, while risks in the Red Sea remain in place. Traders expect freight rates to further decrease to around $6 million per voyage from Baltic ports to India.