Dubai/Urals crude spread narrows to below $20/b in June

Quantum Commodity Intelligence – The spread between Russia's flagship Urals crude and the Middle East Dubai benchmark has narrowed to the lowest level since the re-routing of Russian crude to Asia after Moscow invaded Ukraine.

Urals export prices averaged $55.28/b in June, according to the Russian Finance Ministry, still below the $60/b price cap and up nearly $2/b from the May average of $53.34/b.

Quantum's monthly average price for August-loading Dubai trading in June was $74.97/b, versus $74.93/b on May-loading crude.

This puts the Dubai/Urals spread at $19.69/b on a FOB basis last month versus $21.59/b in May, the first time the spread has been below $20/b since the price cap was introduced in December. As recently as February, Dubai/Urals was above $30/b.

The narrowing spread comes as Asian buyers maximise throughputs of discounted Russian crude, with the medium-sour Oman grade now pricing above Brent, in part aided by soaring fuel oil cracks.

Traders said that Indian refiners are now paying discounts of under $10/b for Urals versus Brent or Dubai, versus around $20/b last year, based on a DES India basis (Delivered ex-ship).

This has eaten into the massive profits being booked by trading firms shipping Russian barrels to India, but the spread between FOB Baltic or Black Sea for India discharge is still comfortably enough to cover the cost of shipping and insurance on the so-called 'dark fleet'.

According to data from shipping and analytics firm Kpler, daily volumes of Russian crude during June climbed for a 10th month to 2.2 million bpd, a volume that again exceeded the combined shipments of Saudi Arabia and Iraq.

This included a record 1.5 million bpd of Urals crude, while traders said Indian refiners have faced stiffer price competition from Chinese refiners also chasing medium sour barrels this summer.