The price of Russian oil is rising

Alexey Belogoryev, Research and Development Director of the Institute for Energy and Finance, commented to Business FM on the growing demand for Russian oil in China and the increase in prices for Russian oil grades:

“What is happening is what experts have been talking about for a long time. If the Strait of Hormuz is not unblocked by autumn, the situation will worsen, because reserves are gradually being depleted. In developed countries — in Europe, the USA, and China — the reserves have already been almost completely used up.” This is evident both from the increase in oil prices and, even more so, from the sharp rise in freight rates for transporting the same oil. Therefore, China indeed has fewer alternatives for imports. Naturally, this is driving up demand for Russian supplies. Indeed, it is likely that China’s imports of Russian oil will increase in the coming weeks, and along with the growth in demand, the price naturally rises and the discount on Russian Urals oil — and even more so on other Far Eastern grades — decreases. Far Eastern grades are lighter and low‑sulfur; they often even trade at prices comparable to Brent. The expected trend is that if the situation in the Persian Gulf does not improve in the next month and a half, Brent prices may well rise to $120 per barrel. Naturally, this will lead to an increase in the prices of Russian grades, including Urals. Russia now has the opportunity to increase physical oil supplies due to the oil refining crisis. Crude oil exports have been growing over the past few months, so it is possible to benefit from increased supplies. But the main gain, of course, will come from rising prices. For companies and for the state budget, especially against the backdrop of the weakening ruble, this will certainly be a significant boost to budget revenues”.