Russian Oil Prices Soar Amid Middle East Tensions
The price of Russian oil has surged to $110 per barrel amid escalating tensions in the Middle East. According to Reuters, citing traders, Russian oil prices have risen by 175% compared to early July, reaching their highest level since April.
The increase is attributed to problems with Saudi oil supplies via the Red Sea, following a Houthi attack that damaged an oil pipeline pumping about 3 million barrels of oil per day. Saudi Arabia has warned customers about the cancellation of some September deliveries.
Russian Urals is being sold at a premium in India and China, with prices approximately $8 and $20 higher than Brent, respectively. This price dynamics could significantly improve Russia's oil and gas budget revenues, which have been affected by attacks on oil refineries and a ban on gasoline and diesel fuel exports.
Despite the high crude oil prices, Raiffeisenbank analysts estimate that the total export of oil and petroleum products has decreased to its lowest level since the pandemic. The expected increase in oil prices is unlikely to fully compensate for the fall in exports, leading to a possible increase in Russia's budget deficit.