Urals premium hurts Russian integrateds

Russia’s Opec+ compliance has pushed its benchmark grade to a premium over Brent. But this is not good news for the country’s large integrated oil firms

Urals crude typically trades at a discount to Brent and many other international benchmarks because of its high sulphur content, which adds costs at refineries. And this discount widened in March and April as lockdowns resulted in scaled back operations at refiners in Europe—the main destination for Urals. However, under the new Opec+ deal Russia has pledged to curb supply, excluding condensate, by c.2.5mn bl/d, to 8.5mn bl/d in May, June and July. Urals is thus scarcer, driving up the price as some refineries cannot easily switch to other grades. Urals had a $1.90/bl premium to Brent on Tuesday, which narrowed to $0.85/bl on Wednesday, Moscow-based bank VTB Capital estimates. The premium wa