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High prices, low output keep Russia’s Urals crude oil in Europe

Russia’s flagship Urals crude oil has mostly been used in Europe so far this year due to relatively low output and high prices, while Asian markets have shunned the blend, data showed on Wednesday.

As a result, Russia has lagged behind Saudi Arabia in China’s energy market, one of the world’s largest.

According to Refinitiv Eikon data, the port of Rotterdam, Europe’s biggest oil hub, received 9.7 million tonnes of Urals in the first half of this year, up from 7.3 million tonnes in the same period last year.

At the same time, supplies of seaborne Urals cargoes to China plunged to 1.8 million tonnes from 7.86 million in the first half of 2020.

This year, the spread between Brent – to which Urals is linked – and the Middle Eastern Dubai blend DUB-EFS-1M has reached an all-time high of more than $4 per barrel, making Russian oil uncompetitive in Asia.

India has also cut purchases of Urals, while South Korea and Thailand have completely stopped intake of the blend.

Some European countries, notably Finland, have also reduced purchases of seaborne Urals amid the move to greener economies.

Turkey, Bulgaria and Romania have kept inflows of Urals steady this year, while Poland and Germany have increased imports of the seaborne blend.

According to Refinitiv Eikon, the port of Gdansk in Poland imported 2.7 million tonnes of Urals in January-June, up from 1.7 million in the first half of 2020.

Seaborne supplies have also risen amid reduced flows via the Soviet-built Druzhba pipeline as some companies have failed to agree supply deals. For example, Poland’s Grupa Lotos has not extended a contract with Russia’s Rosneft.

The United States also increased imports of Urals to 500,000 tonnes in the first half of the year from 100,000 tonnes in the same period of 2020.

Some traders believe Russia will increase supplies of Urals as the OPEC+ group of oil producers, of which it is a member, eases production curbs.
Source: Reuters (Reporting by Olga Yagova, additional reporting by Gleb Gorodyankin Writing by Vladimir Soldatkin Editing by Mark Potter)

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