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US sanctions against Venezuela and Iran have had an unintended side effect: they have increased Russian sour crude oil exports, said Bloomberg, adding that calculations have shown that Russian oil companies have harvested at least 905 million US dollars from these sales between November and July.
The Urals blend is the big winner of US sanctions, according to Bloomberg calculations. Venezuela is one of the world's largest suppliers of heavy crude, but sanctions imposed by the United States have significantly reduced its exports. Iran is also producing heavy, which has now become less readily available to foreign buyers, thus freeing space for the Urals. Finally, OPEC members have given priority to reducing their heavy crude oil production as part of their December 2018 deal, which has put additional pressure on the supply of heavy crude oil.
Like heavy crude in general, the Urals normally trade at a lower price than Brent. However, along with other major blends, the Russian has narrowed the gap since November, when US sanctions against Iran were reinstated, despite waivers granted to eight importing countries . In the end, it shifted to a premium, especially in the Mediterranean, where a lot of Iranian oil passed.
Currently, the Urals are trading at a discount of more than $ 2 per barrel compared to Brent crude, but at a premium to West Texas Intermediate. He switched to a bonus in Brent several times this year. At the same time, according to information provided by oil data analysis company OilX, Russia's overall output is also rising, after a temporary decline. In August, it exceeded 11.3 million bpd, after falling below 11.2 million bpd in July.
The sanctions imposed by the United States permanently change the models of production and prices of heavy crude, as well as American production. Eni, the Italian Eni recently said in his latest report of the World Oil Review that last year, the share of crude sour stocks grosser fell below 40% of the total for the first time in its history. At the same time, thanks to the American shale revolution, the share of light and sweet crude has increased by more than 20%. This also had an effect on the price difference between light crudes and heavier crudes.
By Irina Slav for Oilprice.com
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