Novak spoke about surges in discounts on Russian oil

Since 2022, Russian authorities have recorded several surges in the discount on RussianUrals oil to Brent. The latter, according to Novak, is related to US sanctions against tankers suspected of transporting Russian oil .

The current increase in the discount on Russian Urals oil to Brent is associated with the latest package of EU sanctions ; there have been two surges in the discount since February 2022, Russian Deputy Prime Minister Alexander Novak told reporters, RBC correspondent reports.

“We have already had two such surges in discount growth - in 2022, then at the beginning of last year. Now this is naturally connected with the sanctions package that came out at the end of last year, this is a natural reaction of the market and market participants in order to insure their risks, so I am sure that as the chains are established, the market will calm down, the discount will decrease,” the Deputy Prime Minister said.

In his opinion, now market prices for oil adequately reflect the current situation. Oil demand growth in 2024 will largely depend on global economic growth; the consensus for demand growth is about 2 million barrels. per day, Novak added.

He also stated that Russia is currently not negotiating with Ukraine and the EU regarding the extension of the transit contract.

Prices for Russian Urals oil have begun to decline noticeably since November last year, although they have not yet fallen below the price ceiling set by Western countries at $60 per barrel. At the same time, the discount of the Russian mark to Brent increased. The US Treasury estimated the growth of the discount at 40% (from $13 per barrel in October to approximately $18.5 per barrel in the first ten days of January) and argued that this was the result of the application of American sanctions against violators.

A new surge in discounting on Russian oil began after the United States tightened controls on compliance with the established price ceiling in December 2023 and imposed sanctions on tankers suspected of carrying Russian oil at a price exceeding this ceiling.

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Forbes, citing data from the Russian Ministry of Finance, writes that in October, the Urals price discount relative to Brent was $9.57, with the average price of Urals being $81.52 per barrel, and Brent — $91.09. In December, the discount grew to $13.65, and oil prices fell: Urals to $64.23 per barrel, and Brent to $77.88. According to the Ministry of Economic Development, the average price for Urals oil from December 15 to January 14 was $455.4 per ton, or $62.55 per barrel (based on the calculation, a ton of Urals corresponds to 7.28 barrels). Thus, even taking into account the increased discount, the price of Urals was still above the ceiling set by the G7.

Moscow considers Western sanctions illegal. Presidential press secretary Dmitry Peskov said that the country had adapted to the restrictions and learned to “hedge against sanctions risks.”