Alexey Belogoryev, Research and Development Director of the Institute for Energy and Finance, commented to Kommersant FM about the discounts for Russian Urals oil on the world market.
The situation for Russian oil can hardly be called favorable yet, Alexey Belogoryev argues:
“According to the general long-term expectations, discounts will decrease, but not likely in the coming months. If we are talking about 2024-2025, then they are expected at the level of 15%, maybe even 10%.
The general situation on the market is very pessimistic in terms of price movements. This pessimism is based on economic assessments, mainly related to demand. There are still big concerns about the possibility of a recession. The pace of demand for oil has slowed down. In recent days, we have seen quite active sales of raw materials. Naturally, benchmark oils - not only Brent and WTI, but also Dubai - are under a lot of pressure.
There is a risk of a further decline, despite all attempts by Saudi Arabia and Russia to stop this decline by cutting production. As long as they don't work. As for Novak's statements about reducing exports, in fact, this wording sounds rather strange, since usually production quotas are still applied. To reduce it, either some kind of government intervention is required, which they try to prevent in Russia, or rather complex coordination between companies. At the same time, it is difficult to understand how the production cuts, which have already been announced, compare with the plan to reduce exports.
One of the main complaints against Russia from the OPEC+ countries was that it formally, perhaps, reduces production, but in the meantime, exports by sea are growing. I wouldn't expect any major impact on the market from this cut. Urals pricing in the coming months and years will continue to depend on the benchmark grades Dubai and Brent.”
Subscribe for updates
and be the first to know about new publications