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Russian Urals crude at highest value since at least 2001

July 03/2020

MOSCOW (MRC) -- With exports of Russia's medium sour Urals crude significantly reduced because of OPEC+ production cuts, the grade has risen to its highest value in S&P Global Platts data going back to 2001, reported S&P Global.

Urals was assessed at Dated Brent plus USD2/b on a delivered Rotterdam basis on June 30, Platts data showed.
Urals supply in July is sharply lower month on month even after May and June loading programs themselves saw big falls.

The July export schedule for seaborne Urals crude shows loadings averaging 774,310 b/d, a reduction of 536,730 b/d on the month to the lowest volume since at least 2012.

The volume in July reflects both the extension of the OPEC+ cuts and the impact of increased refinery runs in Russia, which will reduce the quantity of Urals available for export, sources said.

Loadings of heavier, sour crudes globally have been disproportionately impacted by the OPEC+ cuts, leaving refiners few alternatives.

A European refiner recently paid around Dated Brent plus USD2/b for a cargo loading July 7-11, a trader said. Another source said a cargo loading in the third decade of the month had traded at a premium of USD2.35/b to Dated Brent.

"Sour buyers in the Mediterranean are a bit stuck...nothing to buy and therefore bidding for anything remotely sour that can still be handled by refineries," a trader said.

However, the arbitrage to China for the grade was closed following ample inventory in the country, traders said.

With the country a significant buyer of the grade, reduced demand from the region may provide some respite to Mediterranean and European refiners.

In the Mediterranean, Urals was last assessed at a premium to Dated Brent of USD2.50/b on a delivered Augusta basis. The assessment has only been higher once before in Platts data, when it was assessed at a premium of USD2.55/b on June 18.

As MRC reported earlier, the global oil consumption cut by up to a third in Q1 2020. What happens next in the oil market depends on how quickly and completely the global economy emerges from lockdown, and whether the recessionary hit lingers through the rest of this year and into 2021.

Earlier this year, BP said the deadly coronavirus outbreak could cut global oil demand growth by 40 per cent in 2020, putting pressure on Opec producers and Russia to curb supplies to keep prices in check.

We remind taht in September 2019, six world's major petrochemical companies in Flanders, Belgium, North Rhine-Westphalia, Germany, and the Netherlands (Trilateral Region) announced the creation of a consortium to jointly investigate how naphtha or gas steam crackers could be operated using renewable electricity instead of fossil fuels. The Cracker of the Future consortium, which includes BASF, Borealis, BP, LyondellBasell, SABIC and Total, aims to produce base chemicals while also significantly reducing carbon emissions. The companies agreed to invest in R&D and knowledge sharing as they assess the possibility of transitioning their base chemical production to renewable electricity.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 595,170 tonnes in the first five month of 2020, up by 10% year on year. Deliveries of all ethylene polymers, except for linear low density polyethylene (LLDPE), rose partially because of an increase in capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market was 457,930 tonnes in January-May 2020 (calculated by the formula production minus export plus import). Deliveris of exclusively PP random copolymer increased.
Author:Margaret Volkova
Tags:Europe, PP, PE, LLDPE, crude and gaz condensate, PP random copolymer, propylene, ethylene, petrochemistry, BASF, Borealis, BP Plc, LyondellBasell, Sabic, Total Petrochemicals, Rossiya.
Category:General News
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