Prices for Russia’s Urals crude rose in Asia, with premiums to Brent
rising to around $8 per barrel from $5 a week earlier, though
rising freight costs and disruptions due to Ukrainian drone
attacks are limiting profits, three traders said.
Asian buyers are seeking alternative supply as the war in
Iran chokes off deliveries from the Gulf.
ATTACKS ON PORTS
Yet attacks are also limiting supply from Russia, with
around 40% of its oil export capacity shut last week following
drone attacks on Baltic ports, traders said.
As of Monday, the 700,000-barrels-per-day port of Ust-Luga
remained closed after an attack.
The FOB price for Urals oil loading from Baltic Primorsk was
at roughly minus $25 per barrel to dated Brent compared to some
minus $27 per barrel in mid-March, Reuters calculations based on
LSEG data showed.
“It is becoming increasingly difficult to secure volumes,”
one trader said, adding that even at firmer prices, some sellers
are not able to guarantee the cargo.
Russian oil producers have warned buyers they could declare
force majeure on supplies from major Baltic Sea ports amid the
Ukrainian attacks, sources said on Friday.
RECORD HIGH RATES
Freight rates reached new records last week. The cost of
shipping Aframax cargoes from Primorsk to India rose to $21–22
million and from the Black Sea port of Novorossiysk to up to $20
million, traders said.
Transport costs for Russian oil are near all-time highs
driven by the drone attack threats, longer routes, higher
insurance premiums and arrests of shadow fleet tankers, they
added.
The United States granted a 30-day waiver which lasts until
April 11 allowing buyers globally to purchase Russian oil in an
effort to offset supply shortages.