The Russian oil discount is likely to continue to decline

Sergey Kondratiev commented to the Infotech news outlet about discounts in Russian oil prices.

The reduction of the discount on Russian oil came as a surprise to both the market and Russia: it is enough to recall the June discussion about the maximum discount for calculating the mineral extraction tax at $20 per barrel. Recall that in the spring of 2022, the discount could reach up to $38 per barrel.

Now, in Russian ports, discounts for Urals are about $16-18, in Kozmino for ESPO even less – $5-6, Sergey Kondratiev, head of the Economic Department of the Institute for Energy and Finance @IEFnotes, told InfoTEK.

In some cases, the discount on Russian oil may reach a minimum, to levels close to the pre-crisis time.

"We see a sharp reduction in discounts – both on CIF, in the ports of delivery, and on FOB, in Russian terminals. For example, in the ports of Northern China, the discount for the ESPO mixture is $2 per barrel, 3 times less than the May levels. Indian buyers talked about reducing discounts for Urals to $4 per barrel. I think these are one–time deals, but the downward trend is obvious," Kondratiev said.

The expert added that the probability of an increase in discounts is extremely low, but in theory it could be leaded by tougher Western sanctions and an increase in OPEC+ production. "Both now look not very likely," Kondratiev noted.