Russian oil cargoes earn a premium for carrying sanctioned crude, however weaker markets are squeezing these margins

• Tankers carrying Russian oil command a “sanctions premium,” however these margins have narrowed, Argus information reveals.
• Freight charges for Russia’s flagship Urals crude have declined throughout the board as provide builds up.

Tankers carrying Russian oil earn a premium for his or her sanctioned cargoes, however margins have narrowed in April amid a broader weakening throughout power markets, analysis from commodities tracker Argus reveals.

Freight charges for ships carrying Russia’s flagship Urals crude out of the Black Sea, Baltic, and Barents Sea to China and India declined throughout the board as out there tonnage stored build up in these areas, in line with Alex Younevitch, Head of Freight at Argus.

Argus information shared with Insider confirmed that the sanctions premium for Russian-origin cargoes from the Black Sea to the west coast of India narrowed by 50¢ per barrel month-on-month.

“As demand for Suezmaxs stagnated and climate situations improved within the Turkish straits, common charges got here underneath strain and so did the premium for Russian enterprise,” Younevitch stated through emailed feedback.

Nonetheless, he added that the premium may maintain for a while longer even in a weakening market, as sanctioned cargoes stay a precious enterprise.

However OPEC+’s choice early this month to chop manufacturing by 1.15 million barrels a day may weigh on freight demand additional.

“Charges are more likely to stay underneath strain all through April and into Could as chartering is muted and looming OPEC+ cuts preserve nibbling at shipowners’ confidence,” Younevitch stated.

Since Moscow’s invasion of Ukraine in February 2022, Europe has shunned its provides and Russian barrels have been virtually totally absorbed by China and India, with the 2 nations collectively accounting for 75% of complete Russian crude exports within the first quarter of this 12 months.

Monitoring information from Kpler confirmed earlier this month that complete Russian oil exports have now surpassed pre-war ranges.

Nevertheless, analysis revealed Wednesday from the Kyiv College of Economics discovered that whereas value caps have been efficient in reducing into Moscow’s export income, widespread sanctions violations persist.