Russian Urals oil prices have plummeted to their lowest levels of 2023, driven by a significant decline in international benchmark Brent prices. This downturn is largely attributed to rising trade tensions between the U.S. and China, particularly following tariff policies announced last week.
According to calculations from Reuters based on traders’ data, the drop in Urals prices will severely impact Russia’s oil revenues, which are crucial for financing the country’s budget. This slump in oil and gas revenues occurs against a backdrop of challenging negotiations between Russia and the United States over a ceasefire in Ukraine.
Brent futures experienced a sharp decline, losing $2.43 or 3.7%, settling at $63.15 per barrel by 1009 GMT—marking the lowest level since 2021. Simultaneously, the prices for Russian Urals oil, loading from ports such as Primorsk, Ust-Luga, and Novorossiisk, fell to approximately $53 per barrel last Friday.
Analysts predict that if Brent prices continue to slide, Russian Urals might see a dip to around $50 by Monday, which would be the lowest price since March 2023. On a positive note, lower prices for Russian oil may create more opportunities for oil sellers to secure tankers, as the pricing falls below the established western price cap.
Current analyses suggest that by Monday, Urals prices could drop $10 per barrel beneath this cap. In late 2022, the Group of Seven nations, along with the European Union and Australia, implemented a $60 cap on Russian oil sales to reduce revenues from seaborne exports as part of ongoing sanctions.
Additionally, the cost of shipping Urals oil from Baltic ports to India has decreased significantly, averaging $7 million per one-way shipment after peaking earlier in the year.