Russian Urals Crude Surges as Asian Demand Outpaces Supply Constraints
Russian Urals crude has become a premium product in India due to strong demand and tight supply. For the first time since last May, the price of Russian Urals crude sold to India is higher than the Brent benchmark.
According to three 'trading sources', cargoes of Urals oil for October delivery have been offered at a premium of up to $1 per barrel compared to Brent dated. This is a significant shift from discounts of between $1 and $2 per barrel for September arrivals.
The increased demand from Asia, particularly India and China, has led to a combination of factors driving the rebound in Russian Urals crude prices. Indian refiners have increased their purchases due to renewed concerns about Middle East supply security following new military tensions with Iran and disruptions in tanker traffic through the Strait of Hormuz.
The ongoing drone attacks on southern Russia and in the Black Sea region have 'constrained' the supply of Urals crude from the Russian Black Sea port of Novorossiysk, limiting export availability and supporting prices. Chinese demand for Russian oil, including ESPO blend, has also been boosted by the same factors.