Russian crude price touches 13-year high: Here we decode why
What's the story
The price of Russian Urals crude oil has surged to a 13-year high, hitting $116.05 per barrel. The spike comes as Moscow reaps the benefits of a global oil rally linked to the ongoing US-Iran conflict. The price was recorded at Russia's Primorsk port, the country's biggest oil-export facility on its Baltic coast, according to Argus Media data.
Financial impact
Crude price nearly doubles Russia's budget projections
The current price of Russian Urals crude is almost double the average $59 per barrel assumed in Russia's budget for this year. This windfall from oil revenues is easing financial pressure on the Kremlin as it continues its military operations in Ukraine. However, Ukrainian attacks on oil-export infrastructure and refineries are undermining Moscow's ability to capitalize on the global crude rally.
Supply disruption
US-Iran conflict impacts global oil prices
The ongoing conflict in the Middle East has disrupted nearly 20% of the world's oil supply transiting through the Strait of Hormuz. US President Donald Trump has threatened Tehran with destruction of key infrastructure if it doesn't reopen this critical waterway by a Tuesday deadline. Meanwhile, in Russia's Black Sea port of Novorossiysk, Urals crude reached $114.45 per barrel.
Delivery spread
Urals discount to Brent narrows significantly
The average discount of Urals from Russia's western ports to the global benchmark Dated Brent has narrowed to below $27.75 per barrel, its lowest since mid-December. By the time it reaches India, Urals trades at a premium to Brent, which widened to $6.1 per barrel compared with $3.9 two weeks ago. However, it remains unclear if this delivery spread ultimately benefits Russia or not.