Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Russia Offers Record Discount For Its Oil As Buyers Pause, Struggle To Finance

Russia Offers Record Discount For Its Oil As Buyers Pause, Struggle To Finance

Three buyers of Russian crude oil have been unable to open letters of credit from Western banks to cover their purchases, four trading sources said on Thursday following the Russian attack on Ukraine.
A letter of credit is a letter issued by banks that guarantees a buyer’s payment to a seller will be received on time and for the correct amount. However, banks may find such a definitive guarantee hard to stand by after Russia arrived in Ukraine cities by land and sea early on Thursday morning in what Russian President Vladimir Putin referred to as a “special military operation.”

Missile fire was reported near the city of Kiyv, and Russia has landed in port cities such as Odesa. Crude oil prices have shot up as a result, with Brent crude spiking to more than $104 per barrel.

So who is trying to purchase Russian crude oil? Buyers of Russian oil include Big Oil companies such as BP, Chevron, Exxon, Shell, and TotalEnergies, to name just a few. Trading houses, including Trafigura and Vitol, also purchase Russian crude oil.

Vitol also trades with Russian mining companies, according to Vitol’s website.

The anonymous Reuters sources have not disclosed which banks refused to offer letters of credit for the Russian crude oil, but any halt in the flow of Russian crude oil, which exports 7.5 million barrels of crude oil and crude oil products per day, including to the United States.

In November of last year, 17.8 million barrels of Russian crude oil and petroleum products made their way to the United States.

And we note that the US imported an average of 106,000 barrels per day last week from Russia...

We await the sanctions news later today to see what happens with that data next, and more than 12 million barrels of Russian-origin crude oil and refined products are en route to the U.S. aboard almost two dozen vessels for delivery in the next month, according to oil-analytics firm Vortexa.

Additionally, as Bloomberg reports, some oil traders are pausing purchases of Russia’s crude while they wait to see how the West responds to the nation’s invasion of Ukraine.

Five crude traders and refinery officials said that there’s currently a hiatus in buying of Russian barrels.

"The restrictions will be very deep. We're expecting most European banks will pull out of financing any commodities from Russia. Letters of credit are being stopped, financing in general towards Russian commodities is being stopped," said Igho Sanomi, founder of energy trading company Taleveras.

The pause mirrors what’s happening in the oil-tanker market, where owners are also avoiding offering their ships to transport the nation’s crude.

"The key word today is obviously hold off and do not do anything that could backfire in the future," said Hugo De Stoop, chief executive of Euronav, one of the world's biggest tanker owners, in an interview.

"At the moment, we're not touching any cargo that's linked to Russia."

The situation has seen traders rushing to secure supplies from elsewhere in the world, according to Frontline Ltd., one of the world’s largest owners of supertankers.

In response to this pause in buying (or inability to find credit), Russia has slashed its price for Urals crude to a record $9.80 discount to Brent, according to Platts...

That is almost 10x wider than the average over the past few years.

"We're a big buyer of Urals, but we're not buying at the moment," said a person at a major European refiner.

"We stopped about a month ago."

So, everyone needs Russian oil... but everyone is also terrified to buy it right now due to fears over sanctions.
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Severe Heatwave Claims 2,300 Lives Across Europe
Declining Beer Consumption Signals Cultural Shift in Germany
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
Western Europe Records Hottest June on Record
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
China’s Central Bank Consults European Peers on Low-Rate Strategies
France Requests Airlines to Cut Flights at Paris Airports Amid Planned Air Traffic Controller Strike
Poland Implements Border Checks Amid Growing Migration Tensions
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
Amazon Reaches Major Automation Milestone with Over One Million Robots
Extreme Heat Wave Sweeps Across Europe, Hitting Record Temperatures
Meta Announces Formation of Ambitious AI Unit, Meta Superintelligence Labs
Robots Compete in Football Tournament in China Amid Injuries
China Unveils Miniature Insect-Like Surveillance Drone
Marc Marquez Claims Victory at Dutch Grand Prix Amidst Family Misfortune
Germany Votes to Suspend Family Reunification for Asylum Seekers
Budapest Pride Parade Draws 200,000 Participants Amid Government Ban
Southern Europe Experiences Extreme Heat
Xiaomi's YU7 SUV Launch Garners Record Pre-Orders Amid Market Challenges
Jeff Bezos and Lauren Sanchez's Lavish Wedding in Venice
Russia Launches Largest Air Assault on Ukraine Since Invasion
Massive Anti-Government Protests Erupt in Belgrade
Iran Executes Alleged Israeli Spies and Arrests Hundreds Amid Post-War Crackdown
Hungary's Prime Minister Criticizes NATO's Role in Ukraine
EU TO HUNGARY: LET THEM PRIDE OR PREP FOR SHADE. ORBÁN TO EU: STAY IN YOUR LANE AND FIX YOUR OWN MESS.
Hungarian Scientist to Conduct 30 Research Experiments on the International Space Station
NATO Members Agree to 5% Defense Spending Target by 2035
NATO Leaders Endorse Plan for Increased Defence Spending
U.S. Crude Oil Prices Drop Below $65 Amid Market Volatility
International Astronaut Team Launched to Space Station
Macron and Merz: Europe must arm itself in an unstable world
Germany and Italy Under Pressure to Repatriate $245bn of Gold from US Vaults
Iran Intensifies Crackdown on Alleged Mossad Operatives After Sabotage Claims
Trump Praises Iran’s ‘Very Weak’ Response After U.S. Strikes and Presses Israel to Pursue Peace
Oil Prices Set to Surge After US Strikes Iran
BA and Singapore Airlines Cancel Dubai Flights Amid Middle East Tensions
Trump Faces Backlash from MAGA Base Over Iran Strikes
Meta Bets $14 B on Alexandr Wang to Drive AI Ambitions
FedEx Founder Fred Smith, ‘Heart and Soul’ of the Company, Dies at 80
Chinese Factories Shift Away from U.S. Amid Trump‑Era Tariffs
Pimco Seizes Opportunity in Japan’s Dislocated Bond Market
Labubu Doll Drives Pop Mart to Status as China’s Most Valuable Toy Maker
Global Coal Demand Defies Paris Accord Goals
United States Conducts Precision Strikes on Iran’s Nuclear Sites
US strikes Iran nuclear sites, Trump says
×