Russian Oil Price Jumps Just as Europe’s Refiners Need It Cheap
The price of Russian oil from the nation’s main western ports is rising — just as refineries in Europe could do with a decline.
Traders seeking Urals in northwest Europe were willing to pay 35 cents more than a barrel of the region’s Dated Brent benchmark late last week. In mid-October, the same oil traded at a $2.15 discount. The swing has been driven by the smallest aggregated loading program for the grade from Russia’s Western ports for the time of year since at least 2012. Simultaneously, China is competing for more and more cargoes, shipping them thousands of miles for refining.
The trouble is that traders say Urals — with a slightly higher-than-average sulfur content — isn’t ideal for more basic refiners in Europe, who need to eliminate the pollutant in order to help the shipping industry comply with new environmental legislation that starts in January. So-called simple margins from processing the grade in both northwest Europe and the Mediterranean are plunging, according to data from Oil Analytics Ltd.