Urals crude discounts to Brent narrow on softer freight rates to Asia

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 dip in line with the global oil market, traders said and Reuters calculations showed on Friday.

Freight rates for Aframax ships, which usually load some 720,000 barrels of Urals crude in Primorsk or Ust-Luga for a one-way voyage to Indian ports, eased to average some $7 million from some $7.5 million for April and March-loading cargoes, two sources said. This is still above $5 million for the voyage last September.

Rates for Suezmax tankers, which usually load some 1 million barrels of Urals in Novorossiysk for delivery to India, eased by some $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 some 70 cents per barrel to discounts above minus $13 per barrel, Reuters calculations show.

Discounts for 140-tonne Urals cargoes in the Mediterranean have narrowed by some 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 after Brent lost more then $10 per barrels 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 ease despite U.S. sanctions while Red Sea war risks remain in place.

“I expect to see freight rates going down to $6 million per voyage from Baltic ports (to India)”, a source with a trader told Reuters.

At least three tankers with Russian Urals oil on board chose a longer route to Asia around Africa’s Cape of Good Hope in March and April as military risks in the Red Sea remain high, two traders said and LSEG data showed.
Source: Reuters (Reporting by Reuters; Editing by Vijay Kishore)