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India, China compete for Russian oil
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New tanker availability cuts freight rates
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Russian exporters collect 20-25% less than U.S. firms
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Moscow's oil output pledge supports prices
MOSCOW, Feb 23 (Reuters) - Russian oil export revenues are set to rise in March as falling freight rates and strong demand pushes Russian oil prices towards a $60 per barrel Western price cap, based on traders' and Reuters' calculations, challenging the view that the mechanism was increasing pressure on Moscow.
The European Union, G7 countries and Australia introduced a $60 per barrel price cap on Russian oil from Dec. 5, aiming to curb Russia's ability to finance the war in Ukraine. U.S. Treasury Secretary Janet Yellen said on Thursday the caps helped to cut Moscow's oil revenues.
"Last month, the Kremlin’s oil revenue was nearly 60% lower than in the immediate aftermath of the invasion," she said. However, the latest Russian oil pricing figures, as assessed by traders, suggest Russian exporters are collecting only 20-25% less for their crude than U.S. exporters for similar types of oil. Reuters calculations based on market data show Urals prices for crude oil loading in early March rose to around $55 per barrel at Baltic ports versus $39-$45 in January, excluding the cost of shipping and insurance.
In comparison, a similar type of crude sold in a U.S. port
on similar conditions would generate around $65-69 per barrel.
The EU, G7 nations and Australia introduced the $60 per
barrel price cap on Russian oil in addition to the EU's embargo
on imports of Russian crude by sea and similar pledges by the
United States, Canada, Japan and Britain.
The price cap allows non-EU countries to import seaborne
Russian crude oil, but prohibits shipping, insurance and
re-insurance companies from handling cargoes of Russian crude
unless it is sold for under $60.
Moscow's oil export revenues fell by 40% year-on-year in
January, Russia's finance ministry has said, as Russian crude
was sold at discounts of $15-$20 per barrel to China, India and
Turkey, while shipping it also cost $15-$20 per barrel.
But freight rates for Russian oil eased in February from
December-January levels as more shipowners entered the market,
raising tanker availability for Russian barrels, traders said.
"Freight cost to travel from the Baltic to India has fallen
sharply, supporting the prices (for Urals)," a trader for the
Russian crude oil grade said.
Traders estimated and Reuters calculations showed the cost
of shipping a 100,000 tonne cargo from a Baltic port to India
amounted to $8.5 million-$9 million in March or $11.8-$12.5 per
barrel compared with $16.6 per barrel in February.
Indian buyers, which have in recent months taken more than
half of Urals seaborne exports, are offering higher prices
because of rising competition from China, which is also keen to
take on more Russian oil as demand rebounds, another trader
said.
Two traders familiar with Russian oil exports estimated the
discounts on Urals have narrowed to $12-16 per barrel currently
from $15-$20 per barrel in recent months.
Also helping to strengthen the value of Urals was news about
Russian output and export cuts.
Russia had already announced plans to cut its oil production
by 500,000 barrels per day in March, amounting to 5% of its
output or 0.5% of global production.
On Wednesday, sources said Russia plans to cut oil exports
from its western ports by up to 25% in March versus February.
(Reporting by Reuters; Editing by Elaine Hardcastle and Jane
Merriman)
