Exclusive: Russian oil was sold to India below the price ceiling in the buyers’ market

NEW DELHI, Dec 14 (Reuters) – Russia’s Urals crude was sold at deeper discounts this month after a European ban on Russian oil imports, with dominant buyer India buying barrels well below the $60 price ceiling agreed by the West. had bought Market sources said.

An EU ban on Russian offshore oil imports from Dec. 5 has prompted Moscow to seek alternative markets, mainly in Asia, for about 1 million bpd.

Also on December 5, the Group of Seven leading economies imposed a $60 price ceiling on Russian offshore oil to limit Moscow’s ability to finance its war in Ukraine.

Russia has said that even if it is forced to cut production, it will not comply with this ceiling.

Western measures have put Russian producers in fierce competition with each other and with suppliers in Asia, Europe and the Middle East, two traders said, meaning their best hope to find buyers is to lower prices.

Since Russia launched its invasion of Ukraine in February, India has become the main outlet for Urals crude oil shipments.

For some deals this month, Urals prices at Indian ports, including insurance and shipping, have fallen to around minus $12 to $15 a barrel against the dated Brent monthly average, from a discount of $5 to $8 a barrel. According to sources, the barrel in October and 10-11 dollars in November.

These discounts mean that oil is in some cases sold for less than the total cost of production, including local duties, industry sources said.

Transportation adds to the pressure

Pressure on producers in Russia’s western ports has increased as a shortage of ships suited to Russia’s winter climate has pushed up freight costs, which could be borne by the seller, depending on the terms of the deals agreed.

Freight rates have risen to between $11 and $19 a barrel, compared with less than $3 a barrel before February, and are almost twice as much as in the middle of the year.

Discounts for Urals oil in Russia’s western ports for sale to India have risen to $32-$35 a barrel under some deals, excluding freight, Reuters calculations show.

Benchmark Brent fell below $80 a barrel in early December, while the estimated cost of Russian oil to producers, including extraction costs, taxes and transportation to ports, has fallen, Deputy Energy Minister Pavel Sorokin said last week. Exports were around 15 to 45 dollars per barrel. Year

According to traders, Russian oil suppliers are trying to use their ships and shipping partners to transport Urals oil to India, which can reduce shipping costs.

But many oil producers still rely on trading companies, meaning they must share any profits they make.

India, Asia’s second-largest oil consumer, is better positioned to buy Urals than China because of its shorter shipping route and its refineries are well-suited to processing Russian oil.

In addition, New Delhi recognizes ships and insurance covers provided by Russian entities that are no longer recognized in Europe.

Refinitiv Eikon data showed that Urals shipments to India rose to at least 3.7 million tonnes in November, reaching a record 53.2 percent of total grade loadings through seaports last month.

Russia overtook Iraq as India’s largest oil supplier in November, data from trade sources showed.

A source at an Indian refinery said: “The market is full of Urals. There is plenty. Many traders are offering cargoes of Urals for delivery in December and January.” None of the sources could be named because they were not authorized to speak to the press.

Nidhi Verma and Reuters reporters; Edited by Barbara Lewis

Our Standards: The Thomson Reuters Trust Principles.

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