Russian oil has fallen to record prices: why Russian oil is getting cheaper and getting stuck at sea.

Situation on the Russian oil market

According to ТСН: Russia is selling oil at the lowest prices since the beginning of 2022, while significantly increasing export volumes. However, its crude oil is stuck on tankers at sea.

According to Bloomberg, citing Argus Media, the price of Russian oil continues to decline.

The Urals grade, supplied from the Black Sea, as well as ESPO through the Pacific Ocean, is trading at the lowest prices since the start of the war.

From December 1 to 7, the export price of Urals from Baltic ports decreased by approximately $2.40 per barrel, standing at $41.16. In Novorossiysk, this grade fell by $2.80, trading at $38.28 per barrel.

The price of ESPO, primarily supplied to China, decreased by $1.60, averaging $52.36 per barrel.

For India, one of the main buyers of Russian oil, minimal prices are also recorded. In the first week of December, the costs for Urals with delivery fell by $1 to $57.70 per barrel, the lowest figure since March 2023.

The discount on Russian Urals relative to the benchmark Brent reached $25.80, double the figures after the introduction of US sanctions against Lukoil and Rosneft. This difference is approaching the historical maximum of May 2022, when it was $34.

Export of Russian oil and accumulation problems

Despite falling prices, Russia is increasing export volumes. From December 1 to 7, exports rose to 4.24 million barrels per day, which is 290,000 more than the previous week. This is the highest level of deliveries since the beginning of the full-scale invasion.

However, a significant amount of Russian oil remains on maritime tankers. According to Bloomberg estimates, about 180 million barrels are stored in floating storage, which is 28% more than at the end of August.

It was previously reported that damage to oil infrastructure facilities in the Russian Federation by long-range drones could reduce the budget of the aggressor state by another 20-30%.

It has also been reported that Hungary intends to challenge in the European Union Court together with Slovakia the plan prohibiting EU countries from importing gas and oil from Russia.

These news indicate that despite Russia's attempts to increase exports, the oil market is facing serious challenges. The decrease in oil prices could affect the country's economic stability, while the accumulation of crude on tankers indicates difficulties with supplies and potential consequences for the global energy market.