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Who Is Dumping Oil At >25% Discount?

Russia Is…

👉 The EU is trying hard to reduce imports of Russian oil and considers a total embargo, whereas the Kremlin threatens repeatedly to cut off its oil taps for „unfriendly nations“
👉 Market data tells us that currently, Russian oil trades at a historically high discount of up to 32%
👉 Indicating that Russia might have severe problems compensating for  shrinking Western demand

Can Russia Substitute Falling Western Oil Demand?

In light of more or less strict sanctions imposed on Russian black gold, many European countries have already downsized their oil imports from Russia. According to media reports, Russia is pro-actively looking for new customers for its crude oil. Russia shows optimism and hopes for new oil clients, especially from Asia. Yet, market data currently reveals that this is anything but easy: Prices for Russian oil are falling, and currently the price difference between Urals and Brent is at a historical high.

Russian Oil Already Trades at Record Discounts to Brent!

The commodity price is the most important indicator since it reflects supply and demand in world markets. Declining demand usually leads to falling prices. We looked at prices for Urals crude oil and Brent crude oil and summarized their development in below chart. In the past, both prices showed very similar almost identical patterns. However, the difference between Brent and Urals has grown substantially since the Invasion of Ukraine began. In other words, Russia has sold its most important export commodity at discounts of up to 32% compared to Brent.

This price development is very likely evidence that it is quite difficult for Russia to sell oil at pre-war volumes and prices today.