Urals diffs fall on high freight costs, EU agrees price cap

Urals crude oil differentials to dated Brent widened on Friday as record high freight costs for Russian oil due to a shortage of tankers weighed on prices, while EU governments finally agreed to the price cap on Russian oil.

• Freight rates for tankers carrying Russian oil jumped to new records, especially for voyages to India and China, the main buyers for Urals oil in Asia.

• Traders said that shortage of tankers was behind the jump in freight costs as ship owners were reluctant to offer services for Russian barrels due to a looming EU embargo and the price cap.

• Poland agreed to the EU's deal for a $60 per barrel price cap on Russian seaborne oil, allowing the bloc to move forward with formally approving it over the weekend, Poland's Ambassador to the EU Andrzej Sados said on Friday.

• Russian oil output could fall by 500,000 to 1 million barrels per day (bpd) early in 2023 after the EU imposes a ban on seaborne imports from Monday, two sources at major Russian producers said.

PLATTS WINDOW

• No bids or offers were made for Urals, Azeri BTC or CPC Blend in the Platts window on Friday, traders said.

NEWS

• Russia's offline primary oil refining capacity is expected to fall by 28% in December from the previous month to 1.628 million tonnes, according to industry sources' data and Reuters calculations.

• India will continue buying Russian oil and even look for term contracts as sanctions allow purchases provided Western services are not used, an oil ministry source said.