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Russia Sees Oil Sales Continuing Thanks to Discount, Interfax Reports

Russia is still able to sell its crude due to discounts and aims to keep output steady even amid unprecedented sanctions.

Russia Sees Oil Sales Continuing Thanks to Discount, Interfax Reports
Valve control wheels connected to crude oil pipework in an oilfield in Russia. (Photographer: Andrey Rudakov/Bloomberg)

Russia is still able to sell its crude due to discounts and aims to keep output steady even amid unprecedented sanctions, Deputy Prime Minister Alexander Novak said.

“If the crude is trading at a discount, people will gladly buy it, like now,” Novak told Russian lawmakers on Monday, according to Interfax news agency. “We will now be looking at the Asia Pacific region, work with them in terms of loadings and supplies.”

The invasion in Ukraine has triggered wide-scale sanctions against Russia and its energy sector. The U.S. and the U.K. earlier this month banned imports of Russian crude, now a similar move is being considered in the European Union, the single largest consumer of the nation’s energy resources. 

Oil refineries across Europe are snubbing Russian oil after the country’s invasion of Ukraine, leaving a question about how much other regions -- especially Asia -- would snap up. The answer will go a long way to determining how much crude the country supplies to global markets and revenues Moscow gets from selling the commodity.

Calls for European restrictions on Russian oil imports are politically driven as it’s impossible now to replace the volumes, Novak said, according to Interfax.  

Still, the global oil rally has supported the Urals price, which averaged some $95.6 per barrel between mid-February and mid-March, when the Russian military escalation intensified and resulted in the invasion, triggering the bulk of the sanctions. 

Out of an average daily 4.39 million barrels of oil Russia exported to its main foreign markets from March 1 to 15, deliveries via westbound pipelines and ports on the Black and Baltic Seas, which traditionally serve European customers, reached some 2.7 million barrels per day, according to the Russian oil industry data. 

The remaining barrels were either shipped to China via the ESPO pipeline or exported to the wider Asia Pacific region from the port of Kozmino.

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With assistance from Bloomberg