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13 Oct, 2023 16:32

Russian oil discounts shrinking fast – deputy PM

Steady exports and high demand have allowed for a price increase, Aleksandr Novak told RT
Russian oil discounts shrinking fast – deputy PM

Discounts on Russian oil exports have been reduced more than threefold since the beginning of the year due to high demand for the commodity, Russian Deputy Prime Minister Aleksandr Novak said on Friday.

Price-cuts on Russian oil have declined from $35-$38 per barrel seen at the beginning of the year to $11-$12 per barrel, and may further shrink by another $5, Novak told RT Arabic on the sidelines of the Russian Energy Week forum.

Moscow earlier announced it would continue paring the discount of its flagship Urals blend of crude oil to the international Brent benchmark as export flows have “stabilized” prompting competition for Russian energy on the global market.

“Transport and logistics chains have stabilized, we have agreed with friendly countries on new markets and on the participation of companies. Now there is higher competition for our products and, naturally, market demand is shaping the reduction of the discount,” Novak explained.

In its latest budget policy document, Russia’s Finance Ministry stated that the oil discount was expected to gradually decrease to $6 per barrel in 2026. Next year, the price-cut is anticipated at $15 per barrel and in 2025 it is expected to be $10. 

“The discount is formed on the market. We ourselves do not revise it. The discount is a reflection of the market value of our petroleum products, our oil. When the risks are high, the discount is high. When risks go down, the discount goes down too,” Novak explained.

Global oil prices saw a massive quarter-on-quarter surge of nearly 30% over the period of July-September this year amid restricted supply due to production cuts agreed by OPEC and its allies, including Russia.

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