Urals oil prices for India hold firm above cap as Russia plans output cuts

Russia is selling Urals oil to India well above a Western price cap despite payment delays and difficulty finding tankers, Reuters assessments based on trade sources data showed on Thursday.

Russia’s government has ordered companies to reduce oil output in the second quarter to ensure they meet a production target of 9 million barrels per day (bpd) by the end of June in line with its pledges to OPEC+, sources told Reuters earlier this week.

The West has imposed a price cap of $60 per barrel on Russia oil to reduce revenue to the Kremlin for its military actions in Ukraine. Washington has also sanctioned trading firms and tankers to bring more trade under the cap.

Recently U.S. sanctions on Russia’s main shipping firm Sovcomflot pushed Indian refiners to reject oil deliveries on its tankers, complicating logistics for Moscow.

Urals oil price for Urals oil cargoes loading from Russia’s Baltic ports in April was around $68 per barrel as of Thursday, Reuters assessments showed.

Spot Urals oil prices on a delivered ex-ship (DES) basis in Indian ports remained stable from levels for March-loading cargoes at a discount of around $3.5-4 per barrel to dated Brent, the sources said.

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, remain around $7.5 million, also in line with rates for March-loading cargoes, the sources said.

“Urals prices hold firm. There’s no pressure, as Indian buyers will likely get fewer Russian barrels loading in the second half of April,” one of the sources said citing preliminary offers of Urals loading next month.

Oil loadings from Russia’s western ports are expected to fall after April 10, the source added.

Russian Urals and KEBCO oil loadings have been set at 2.2 million metric tons during April 1-10 versus 2.4 million tons over March 1-10.
Source: Reuters (Reporting by Reuters reporters in Moscow, additional reporting by Nidhi Verma in New Delhi; editing by Jason Neely)