Export price of Russian oil Urals went negative

US, WASHINGTON (ORDO NEWS) — Due to the sharp decline in world oil prices, the price formulas for establishing the price of black gold on the domestic market of Russia in the last days of March became negative. This was reported by the news service of the analytical agency Argus.

According to the agency, because of an unprecedented drop in oil prices on the Russian market, a paradoxical situation has developed.

“Price formulas began to correspond to negative values. These formulas serve as the main guideline for pricing in the domestic market,” the article says.

So, the quotation ” Urals FIP Western Siberia FORMULA” on Monday was minus 1.007 thousand rubles per ton, and on Tuesday fell to minus 1.2 thousand. For delivery on FIP terms, the seller must deliver the goods to the pipeline at his own expense.

This means that transportation costs, payment of export duties and other expenses exceeded the average price for Urals in North-Western Europe and the Mediterranean region over these two days.

Earlier, the agency reported that the price of Urals in North-Western Europe on March 30 fell to a minimum since 1999 and amounted to $ 13 per barrel.

This situation took many market participants by surprise, as their prices for the supply of black gold for annual and short-term contracts are based on the value of the formula during the month of delivery, the agency said.

It is noted that according to the results of March, the average quotation value still remained positive, having fallen by about 12.5 thousand rubles per tonne compared to the February figure.

“Suppliers worry that a long period of low prices will contribute to zero or even negative profitability of oil sales in Russia,” the publication said.

The situation in the world oil market

Oil quotes almost halved since the beginning of March due to a slowdown in market demand. The cause of this development was the outbreak of coronavirus, as well as the exhaustion of OPEC + agreements . On March 6, the countries participating in the alliance could not agree on changing the parameters of the transaction. It was also not possible to extend it.

Russia insisted on preserving the existing conditions, and Saudi Arabia wanted to further reduce development. As a result, from April 1, restrictions on the extraction of black gold in the countries of the former alliance are lifted.

After the failure of the OPEC negotiations, the media began to write about the start of a producer price war. At the same time, Saudi Arabia officially announced an increase in oil supplies to 12.3 million barrels per day. This is 300 thousand barrels per day higher than its production capacity. Riyadh could achieve this indicator through stockpiles.

Spokesman for the Russian President Dmitry Peskov said that Russia and Saudi Arabia are not waging price wars, but there is an unfavorable world situation.


Our Standards, Terms of Use: Standard Terms And Conditions.

Contact us: [email protected]

The article is written and prepared by our foreign editors from different countries around the world – material edited and published by Ordo News staff in our US newsroom press.