Page 7 - AsianOil Week 09 2023

AsianOil COMMENTARY AsianOil

Crude oil prices

The Russian state-controlled Russian Baltic exchange
National Reinsurance Company (RNRC) has Prior to the war Russia could sell Urals at Pri-
become the main reinsurer of Russian ships, morsk, its biggest oil port in the Gulf of Fin-
including the state-owned national shipping land, on a FOB basis, or the customer could
company Sovcomflot's fleet. RNRC is controlled buy it in Rotterdam in the Netherlands, a major
by the CBR, which has recently recapitalised the European oil terminus, on a CIF basis.
company to RUB300bn ($6bn) from RUB71bn Cost, insurance and freight (CIF) is an inter-
and hiked its guaranteed capital to RUB750bn national shipping agreement, which represents
so the firm has adequate resources to provide the charges paid by a seller to cover the costs,
reinsurance under international maritime law. insurance and freight of a buyer's order while
These various add-on services and charges the cargo is in transit via a waterway.
can amount to as much as an extra $25 per bar- Much of this trade was handled by the Bal-
rel, bringing the “discounted” Urals price per tic Exchange, a London-based commodity
barrel up to close to the cost of a barrel of Brent. exchange, that also collected data from members
Taking these extras into account Vakulenko on deals to form prices.
estimates that the actual cost of a barrel of Urals “It is important to remember that Urals FOB
is closer to $75 than $50. Primorsk or Novorossiysk, quoted by Argus and
At the same time, the combination of selling Platts, have never been the proper market prices,
to “friend countries” such as India or the King- derived from the actual deals. They were always
dom of Saudi Arabia (KSA) that are ignoring the assessments, estimates made by the agencies, cal-
sanctions or schemes like ship-to-ship transfers culated from the three elements – Brent Dated
that create non-sanctioned brands means that price, Brent-Urals spread estimate and shipping,”
70% of Russia’s seaborne exported oil, some says Vakulenko.
800,000 bpd is sold at market rates of $70 or At the same time up to 1.6-1.8mn bpd leave
more on a FOB basis, openly defying the oil price Russia via the Far Eastern route, partially via
cap scheme. ESOP pipeline to China, and partially via the

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