SINGAPORE — Asian refiners are expected to extend imports of Urals crude despite its unusual rise to premiums to the European benchmark, as supplies of costlier Middle East grades are limited, industry sources say.
Prices of Urals rose to the highest premium against Dated Brent in at least 10 years this month, both for cargoes to be loaded from the Mediterranean and Northwest Europe.
But the higher prices of Russia’s main crude have not deterred major buyers such as China, Taiwan and recently India, because the spread between Brent crude and Dubai has turned negative, a rare occurrence since the European crude is a better grade.
And in a sign that the negative value could persist, the September EFS, which took over as front-month on Friday after August Brent futures expire, is already at negative levels.
Hefty supply curbs from the Organization of the Petroleum Exporting Countries since late last year and especially since January, have mostly cut supplies of Middle Eastern crude.
The Russian grade, normally shipped in very large crude carriers, had been largely shunned in Asia last year when Middle Eastern suppliers were showering refiners with as much crude as needed.
Regional refiners, such as Japan, lacked the capacity to take such large shipments of spot sour crude last year, when they had easier access to 500,000-barrel lots of Oman crude and had enough term supplies amid falling domestic demand.
The refiner, which will run a combined capacity of 1.24 million bpd when the second plant becomes fully operational in two months, has started to buy spot Urals crude from June loading onward, traders said.
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