PSB: a barrel of Urals cost not $37.8 as Bloomberg wrote, but $57.4
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Experts from the analytical center of Promsvyazbank (PSB Analytics) analyzed Bloomberg data, according to which on January 6, Urals oil in the port of Primorsk traded at $37.8, which is 1.5 times lower than the introduced ceiling. According to them, this price arose due to a change in the form of calculation and the real cost of a barrel was $57.4.
PSB Analytics is engaged in operational analytics, current reviews, comments on the current agenda and investment ideas.
PSB experts explain that the named agency the price was obtained as a result of a change in the method of calculation. According to old calculations, in the ports of the Mediterranean, Urals oil cost $57.4 on January 6, and about 15% of Russian oil was exported through the port of Primorsk in 2022. “It is important to understand that this is an Argus settlement quotation in the port of Primorsk on the FOB basis, while earlier the agency calculated quotations in the Mediterranean ports and on the CIF basis. In other words, the new version does not take into account delivery, insurance, transshipment, so prices are lower,”— informs PSB Analytics.
CIF is an international commercial trade term, designation of the price of goods, involving payment by the seller of the cost of loading the goods on the ship, transportation and insurance to the destination. The term FOB literally stands for “Free On Board”, that is, the seller can be considered to have fulfilled his obligations after the goods are on board.
Taking into account the embargo, analysts believe that deliveries will be reduced to 10%, in this regard, the mentioned price level in the port of Primorsk does not look scary. By forecast PSB, in 2023, Urals oil will average around $64 per barrel, and the discount to Brent oil will be about $20 per barrel.
Average Urals oil price for 2022 grew to $76.09 per barrel compared to the average price for the same period in 2021 — $69 per barrel. At the same time, the average Urals price for December 2022 was $50.47, which is one third lower than in December 2021 ($72.71 per barrel), by November ($66.47) the price fell by 24%.
Read about the situation in the industry in the publication “Kommersant” “How did we get to this point”.
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