Urals Oil Turns Discounted Against Brent Amid Falling Asian Demand
Urals Crude Price Dynamics and Asian Market Impact
Urals Flips to Discount Against Brent
MOSCOW/NEW DELHI, June 9 (Reuters) - Russian Urals crude has flipped to a discount against dated Brent at Indian and Chinese ports as a fall in demand from Asian refiners pressures prices, four trade sources said.
Previous Premiums and Market Shifts
Urals, Russia's flagship oil grade, had traded at a premium to Brent in India and China, its main outlets, since March as the conflict in the Middle East disrupted global oil supplies and boosted demand for cheaper alternatives.
Declining Demand from Asian Refiners
Demand for Russian crude has now fallen, however, the sources said, as Asian refiners have drawn on inventories, found other alternatives and in some cases cut runs.
Recent Price Movements
Urals cargoes for delivery to India in July and August have this month traded at discounts of between $2 and $3 a barrel to dated Brent, compared to a premium of $7 to $8 a barrel in April and May, the sources said.
Historical Discount Context
During the northern hemisphere winter months, Urals fell to discounts of $7 to $8 a barrel when tougher U.S. sanctions reduced Russian oil output. In June to August last year discounts had been around $1 to $3 a barrel.
Chinese and Indian Market Interactions
While the Chinese and Indian markets follow each other closely, reduced buying by China has a broader effect across grades. It buys less Urals than India, but more lighter Russian grades - ESPO Blend, Arctic and Sakhalin crude.
Chinese Buyers' Response
In some cases Chinese buyers have refused to take Russian oil cargoes for June delivery, one source said, making sellers vulnerable in price negotiations as otherwise volumes may end up in floating storage.
Teapot Refiners and Margin Pressures
Some Chinese small, independent refiners known as teapots have cut runs due to weak margins leading to lower crude prices.
Reporting Credits
(Reporting by Reuters in Moscow, Nidhi Verm in New Delhi, additional reporting by Siyi Liu in Singapore; editing by Barbara Lewis)
