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Russian Urals crude falls 93 cents/b on day to record low discount to Dated Brent

Russian Urals crude differentials fell 93 cents/b day on day to a new record wide discount to Dated Brent amid growing international condemnation of Asian crude purchases and renewed calls for further Russian oil sanctions.

Russian Urals cargoes basis CIF Rotterdam were assessed at a new record low of Dated Brent minus $30.99/b and for CIF Augusta at Dated Brent minus $30.69/b March 23.
Litasco offered a Baltic-loading cargo on CIF Rotterdam basis, loading April 1-5, which was left outstanding at Dated Brent minus $31.35/b in the Platts Market on Close assessment process by S&P Global Commodity Insights.

Despite the lack of interest in the prompt loading cargo there is renewed interest from Chinese buyers for heavily discounted Russian Urals cargoes.

Several Chinese state-owned refiners have returned to the Russian spot market to buy May-loading Urals crude barrels, attracted by their record discount to Dated Brent, refining sources told S&P Global.

“We will have a cargo of Urals for delivery in June, the price is quite low,” a source with a state-owned refinery in southern China said.

VLCCs were heard being built by Chinese traders as Aframaxes were being bought from Baltic port at record-low differentials.

However, Chinese buyers are still facing issues securing Russian Urals cargoes. “One of the current problems is fixing a ship to carry Russian barrels as not many shipowners are willing to take the risk,” a refiner source with PetroChina said.

On the prospect of future sanctions on Russian oil, EU leaders are meeting in Brussels this week to discuss sanctions, but EU foreign policy chief Josep Borrell said further sanctions against Russia would probably not be approved.

Unanimity had not been reached among leaders of the 27 EU states as Germany, which is reliant on Russian crude imports, rejected the proposed ban, along with Hungary.

Even without official sanctions, industry avoidance of Russian oil exports could force up to 3 million b/d of supply off the crude and products markets in coming months, Torbjorn Tornqvist, the head of commodity trading house Gunvor said March 22.

There appears to be no evidence of a shut in from Russian producers when looking at the release of the Urals 1-10 program.

Loadings of Russian medium sour Urals crude from the ports of Primorsk, Ust-Luga and Novorossiisk are set to total 2.8 million mt in the first 10 days of April, up 80,000 mt from the same period in March, according to a copy of the loading program seen by S&P Global March 22.
Source: Platts

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