North American import bans and self-sanctioning by refiners and traders in Europe have barely dented the flow of crude from Russian ports, with volumes successfully diverted east.
But switching flows to Asia, where India has emerged as Russia’s second-biggest customer, has concentrated Moscow’s dependence on an ever-shrinking pool of buyers. China and India now purchase two-thirds of all the crude exported by sea from Russia; at least half of the crude exported by pipeline from Russia also goes to China.
That gives huge negotiating power to buyers in both countries, and it’s a power they have exercised. Russian crude is trading at a hefty discount to international benchmarks, and that is hitting the Kremlin’s war chest
The most recent estimate, from the end of last week, is that Russia’s flagship Urals grade was trading at about $52 a barrel at the export terminal. That’s a discount of $33.28, or 39%, to Brent crude. In comparison, the average markdown in 2021 was $2.85. That discount costs Russia’s oil exporters about $4 billion a month in lost revenue, while also reducing the Kremlin’s tax receipts from overseas sales.Share This