March 29, 2024

The Brent price over the past 8 months has averaged about 84 USD/Bbl as compared to the Russian Urals price of about 68 USD/BBl over the same time period; a price differential of 16 USD/Bbl. The differential decreased from 13 USD/Bbl in early February, 2022  to a peak at just over 35 USD/Bbl in mid-April, 2022.

Since April 2022, the Urals price has been about 70% of Brent. If the Brent price reaches around $72, Russian oil revenue will be insufficient to balance the Russian budget; if Brent drops below $60, a significant portion of Russian oil production will become uneconomical. This assumes that the Urals/Brent ratio remains around 0.68 – 0.73. Incorrys believes that Urals/Brent differential will continue to narrow in next half year. It will occur because of the following factors: decline of Russian oil export volumes, successful redirection of Russian oil export to Asia and in particular by utilizing Russian tanker fleet.