Platts launches quotation for Russian Urals oil with prices in Indian ports
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Since the end of January, S&P Global Platts has been tracking the cost of Russian Urals oil in Indian ports. According to sources Vedomosti, the new quote on February 1 was -$18 per barrel to the benchmark Brent. On February 6, April Brent futures on the ICE exchange traded at $80.1 per barrel.
According to Vedomosti, the new quotation takes into account the cost of oil, cargo insurance and freight, and is linked to forward Brent. Some of the newspaper’s interlocutors believe that the benchmark is more representative than the current Argus quote, but one of the sources questioned this. According to the publication, India now accounts for about 70% of Urals exports. Bloomberg previously reported that India increased its oil purchases by 33 times in 11 months of 2022 compared to the same period in 2021.
The Urals quote was historically calculated by the Argus agency based on a survey of data from market participants: sellers and buyers of oil. Previously, the calculation was carried out on the basis of CIF in European ports. However, since December 5, 2022, an oil embargo has been in effect in Europe. Therefore, Argus now calculates the Urals quote on an FOB basis in the ports of Primorsk, Ust-Luga and Novorossiysk. These values are used by the Russian authorities to determine the amount of taxes and export duties. Due to the change in the calculation of the quote, the average estimated cost fell sharply to $49.48 per barrel in January.
A representative of the Ministry of Finance told Vedomosti that the authorities still continue to use the Argus benchmark. But now work is underway to analyze various options for changing the procedure for determining quotes. The agency promises, based on the results of discussions in the first quarter, to form a “balanced solution that takes into account the interests of the state and business.” “It is too early to talk about details. The key goal for us is to ensure an economically justified level of budget revenues from the oil industry,” the representative told the newspaper.
About the problems with the Urals quote – in the material “Kommersant” “Produce, but verify”.
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