With regard to my notes regarding Russian oil (Urals, specifically), a reader responds:
Urals is more of a medium grade, about 31 API gravity. Comparable to Mars grade from US GOM or Alaskan North Slope. Nothing like Canadian or VZ grades that can be 10 API or lower, and are usually around 17 API during transport. (California crude is also about 17.)
The sulfur content of Urals has been creeping up lately, from 1.3% towards high 1s or even 2%. But that's really still comparable to Mars grade or ANS and still less than classic medium grades like Basra. And it's not like the 4% in Canadian, VZ, or California heavy crudes.
Also, note that the world is NOT short of medium, heavy, or light grades. This is all silliness from reporters and analysts that have never really worked in refineries or traded oil globally. Mixing, moving crudes is very normal and has been something the industry has done for last 100 years as new fields of different grades came on line.
Also, FWIW, medium sour grades like Mars, Urals, ANS, Basra still trade at LOWER prices than WTI/Brent (classic light sweet). And heavy grades have even lower prices than medium. Yes, the world got a lot of light sweet from West Texas and the Bakken, but it just (slightly) shrunk the advantage of light sweet. It has not reversed the advantage.
Also, Bakken oil is near perfect, like WTI, in terms of API and sulfur content. Gets premium pricing AFTER reaching its destination. So, if you're trading in Houston or Rotterdam or Singapore, WTI/Brent/Bakken (all very similar) get the premium price. Only reason you see lower sometimes is because of transport (pricing them in the field, versus at the customer).
The reader follows up with these comments (see comments below):
But another issue is some stories talking about the big discounts Urals crude is getting lately.
Over the last month (and mostly last few days), Urals has moved from Brent-$2 to Brent-$12. So you see a lot of posts about Russians hurting on oil prices. But this ignores that Brent itself moved from $90 to $110 over the last month (mostly last few days). So actually Urals is up about $10: from $88 to $98.
Oil tankers are still moving Urals in both the Baltic and Black Seas. However, much of it is now going to Asia (longer transit, more expensive) and there are also risks associated with each of those routes (and to financial payments with Russia). So that's why Urals has moved from -$2 to -$12. It's just needed to compensate the Asian buyers for a longer trip and higher risks.
But net/net: oil is still flowing. And Russians actually getting more per barrel, when you do the math for the Brent increase along with the diff increase.
Not sure if you forgot to approve, or I forgot to send. But another issue is some stories talking about the big discounts Urals crude is getting lately.
ReplyDeleteOver the last month (and mostly last few days), Urals has moved from Brent-$2 to Brent-$12. So you see a lot of posts about Russians hurting on oil prices. But this ignores that Brent itself moved from $90 to $110 over the last month (mostly last few days). So actually Urals is up about $10: from $88 to $98.
Oil tankers are still moving Urals in both the Baltic and Black Seas. However, much of it is now going to Asia (longer transit, more expensive) and there are also risks associated with each of those routes (and to financial payments with Russia). So that's why Urals has moved from -$2 to -$12. It's just needed to compensate the Asian buyers for a longer trip and higher risks.
But net/net: oil is still flowing. And Russians actually getting more per barrel, when you do the math for the Brent increase along with the diff increase.
First time I got this. Thank you.
DeleteYes, this again shows the "fake reporting" by mainstream media to present a certain narrative.
I had not posted that, but I've thought that oil, being a commodity and fungible, someone is going to be being Russian oil. And a nice price for both seller and buyer.
Thank you.
I will bring this long note up to the main body of the blog for easier browsing.
i've always found the interactive periodic table of oil from Platts to be useful:
ReplyDeletehttps://www.spglobal.com/commodity-insights/plattscontent/_assets/_files/downloads/crude_grades_periodic_table/crude_grades_periodic_table.html
mouse along the top graphics to see what it shows...
Urals is said to be 3 million barrels per day...hard to take 3% of the planet's oil off the market without an impact...
That fits my worldview. If releasing oil from the SPR, at 2 million bbls/day for one month, seems to be an answer, it certainly seems taking 3 million bbls / day off the market would be significant. But, again, we'll see if that oil is really taken off the market. One wonders what is driving the price of oil if there's no shortage.
Deletei gather it's not so much that Russian oil is off the market, but there are no buyers, because no one wants to be stuck holding it if another round of sanctions comes down and makes it untradable...
DeleteThat's how I read it, but I doubt China, North Korea are worried.
Deletedo China and North Korea have their own oil tankers? serious question, i don't know. because that could be where the problem would lie; tanker owners not wanting to get stuck with a load of sanctioned oil...
DeleteRjs:
ReplyDeleteThere are buyers. Asians will buy it. The oil is moving. It's just getting a bigger diff to make it move. Yes, there are risk associated with buying it (and with vessels going into the Baltic and especially into the Black Sea.) But that's why Urals went from -$2 to -$12. But at that point, the oil moves just fine.
Actually I think Russia has much bigger issues with which to deal -- as big as their oil problem is -- and maybe it will work out just fine for them -- methinks we're overthinking all of this. Time to move on.
Delete