The Urals blend oil price will no longer be set in Europe, with Asia now the largest market for Russian crude, Rosneft’s CEO says. Reference prices for Urals will be set by markets where “oil volumes actually go,” according to Igor Sechin.
The EU will no longer set prices for Russia’s flagship Urals oil blend, now that Asia is the largest consumer of western-sanctioned Russian crude, the head of the country’s oil major Rosneft, Igor Sechin, said on Monday.
An EU embargo on seaborne exports of crude accompanied by price caps on oil and petroleum products originating from Russia has triggered a reshuffle in global oil supply. In a matter of months, Moscow rerouted most of its oil flows that used to go to Europe, to Asian markets. The country has ramped up its seaborne oil shipments to China, India and Türkiye at the expense of Western nations.
Oil exports to India alone jumped 33 times in December, with Russia now the country’s largest supplier, replacing Iraq. About 70% of Urals cargoes loaded last month went to New Delhi, according to Reuters calculations.
“If Russian oil does not enter the European market, then there is no reference price. Reference prices will be formed where oil volumes actually go,” Sechin pointed out, speaking at the India Energy Week forum.
The Russian government is now discussing how to calculate Russia’s taxable oil price following the import ban and price caps set by the EU and G7 countries.
Currently, for tax purposes, the average price for Urals on the world market is used, in particular in the ports of Augusta (Italy) and Rotterdam (Netherlands). But due to sanctions, Russian oil is practically not supplied there.
Sechin also suggested that “futures contracts, futures settlements” should be abandoned at the first stage in order to regulate market indicators.
To stress his point, the head of Russia’s oil giant even quoted from the Bible. “As it is written in Ecclesiastes, “What is crooked cannot be made straight. And what is lacking cannot be counted.”
Meanwhile, Asian buyers have ramped up imports of a wide variety of Russian crude oil, including lesser-known Arctic grades. Two other popular blends, ESPO and Sokol, have been trading above the Western price ceiling of $60 a barrel. ESPO stood at $66 per barrel, while Sokol traded at $71 per barrel as of Tuesday.