MOSCOW: Russia’s central bank warned that increased competition from Saudi Arabia in Europe, the destination for almost 70 percent of the nation’s oil exports, is creating new risks for its economy.
As Saudi Arabia ships oil to new markets in the Europe, the price discount of Russia’s Urals crude blend to regional benchmark Brent is widening, Bank of Russia’s research and forecasting department said in a bulletin published on its website Thursday. The discount in Rotterdam has increased to $3.50 a barrel, up from its “usual” level of no more than $2, it said.
“Oil supplies to Europe from Saudi Arabia are probably adversely affecting Urals prices,” the central bank’s researchers wrote. That creates additional risks for Russia’s exports, budget and balance of payments, according to the bulletin.
Russia, which relies on energy for almost half of its government revenue, faces its first recession in six years amid a commodities plunge and sanctions related to the Ukrainian crisis. While the country increased the volume of crude supplied abroad by 8 percent through September this year, the total value of the shipments in dollar terms dropped almost 43 percent to $69.6 billion, according to data on the website of Russia’s customs service.
Russian officials have criticized Saudi Arabia’s market strategy since October after it started shipping crude to traditional Russian markets like Poland and Sweden. The Middle Eastern nation is “actively dumping” and its moves could backfire, Igor Sechin, chief executive officer of Russia’s largest oil producer OAO Rosneft, said last month after Poland announced it would take delivery of Saudi crude.
“It has been both Saudi and Kurdish supplies, which put pressure on Urals in north-western Europe,” Ehsan Ul-Haq, senior market consultant at KBC Advanced Technologies in Walton-on-Thames, England, said by e-mail. While demand from refiners and crude flows in the region will drive Urals prices in the coming months, the arrival of Iranian barrels early next year could widen the price discount of Russian exports, he said.
FBR excludes FTA, PTA customs concessions from 2026 tax expenditure report
ISLAMABAD: The Federal Board of Revenue (FBR) has left customs duty concessions granted under Free Trade Agreements (FTAs) and Preferential...
