Discounts On Russian Oil Exceeded $12 Per Barrel

Russian oil producers have increased discounts after Trump's threats against India.

Russian oil producers are increasing discounts on Urals crude after Donald Trump imposed 25 percent duties on India and threatened to raise them to 50 percent for energy cooperation with the Kremlin.

As of August 14, the discount of Urals at the port of Primorsk on the Baltic Sea to the North Sea grade Brent reached $12.16 per barrel, Interfax reported, citing Argus data.

At the end of July, the discount was $11.96 per barrel FOB. In Indian ports (including transportation costs) Urals discounts increased from $2.04 to $2.61 per barrel.

For China, which buys the Far Eastern ESPO grade, discounts at the port of Kozmino increased from $3.75 to $4.81 per barrel over the Dubai grade.

After the increase in discounts, Indian refineries, which buy about 2 million barrels of Urals daily, have started looking again at the Russian grade, whose imports have been suspended due to Trump's duties.

State-owned Indian Oil, Hindustan Petroleum and Bharat Petroleum have again started sending requests to trading firms to buy Urals, three sources familiar with the situation told Reuters.

The discounts for India will lead to lower federal budget revenues, warns Natalya Milchakova, a leading analyst at Freedom Finance Global: given the current price of Brent (about $66 per barrel), the Russian Urals grade is trading at $54-55 against an average of $60 in July.

As a result, oil and gas revenues at the end of the year may fall below 8 trillion rubles, Milchakova does not rule out. Initially, the Ministry of Finance planned to collect 10.9 trillion rubles, but in the summer sharply lowered the plan - down to 8.3 trillion.

January-July revenues of raw materials taxes in the treasury decreased by 18%, and in the last three months are falling at a rate of about 30% year-on-year. In 7 months, the budget, according to the Ministry of Finance, ran a deficit of Br4.9 trillion - 4.4 times more than in the same period a year ago.

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