India’s Urals oil surges above the price cap as supply constraints are expected in August

MOSCOW, July 19 (Reuters) – The price of Russian Urals crude rose above the $60-per-barrel mark on Wednesday as discounts on August shipments at Indian ports eased due to expected cuts to deliveries of the grade, according to four sources and Reuters calculations.

According to them, Ural to Brent rebates loaded in August were as high as $5/bbl based on DES in Indian ports versus $7-8/bbl for shipments loaded in late July.

Estimates of the cost of Ural shipments transhipped in the Baltic in August for delivery to India rose to more than $64 a barrel on Wednesday on rising DES-based prices and strengthening Brent oil, according to data from traders and Reuters.

The G7 countries agreed in December last year a price cap of $60 per barrel on an FOB basis to limit Moscow’s influence, which did not prevent the flow of Russian oil to the world market.

Daily FOB Ural pricing above the price cap does not conflict with any sanctions as the actual price of shipments is usually based on average quotations over several days or a month.

India’s Ural preprocessor prices have been rising for months in a row, with discounts down to their lowest level since spring 2022, when India sharply increased imports of Russian crude amid significant discounts on alternative grades, the sources said.

“Cheap Russian oil is no longer cheap,” one source said.

Some sellers offered deliveries of Urals for loading in August on the Indian market at an even higher price – with a discount of USD 3-4 per barrel on a DES basis, but they did not find buyers.

“We are pulling back, we will not take the risk of a $2-3 (per barrel) rebate, payment is also an issue,” a source working for an Indian oil refiner told Reuters on Wednesday.

“A discount of $3-4 a barrel is not good for us, given that shipments from Russia often arrive late,” a source told Reuters. Reuters sources also told Reuters that Ural shipments from Russia often arrive in India with delays.

Indian imports of Russian oil are likely to fall as discount cuts and payment problems force refiners to increase alternative purchases, a senior Indian government official told Reuters on Monday.

At the same time, a source in the Russian oil market said that according to his estimates, Indian refineries have no alternative sources of sour crude oil.