Quote (Thor123422 @ 7 Jan 2024 03:46)
That is one area I could have been more clear. I didn't intend to say Ural would need to be 80+. I meant that brent crude would need to be 80 with how the current discounted rate is going to come near the break even. Ever since sanctions ural has been trading at a steep discount where it was trading at a premium before. Right now it's around 57 relative to Brent Crude's 78 which is right around what we can expect the break even to be. Around that $60. If Brent falls so will Ural, and if it goes significantly below $80 we can expect that to drive Russian producers possibly into the negative.
TBH I don't think this convo will be productive regardless of what sources I show you. You already drastically misrepresented a source that disagreed with your assessment, and said a few ridiculous things like "they're transporting under $20" when it went as high as $36 just earlier this year and was $20 to India as recently as the beginning of December, said crude has only recently been sustained above $80 a barrel when it's routinely traded above that price since the 2010's..... Just so many bad claims in such a short time.
My point stands regardless of where you look. Oil prices are around break even for Russia, best case scenario they are profitable but not drastically so at current prices when you take into account increased shipping, necessary use of intermediaries, increased cost of using old ships and having to bring new transport online, and increased cost to drill.
You are really out of your depth here and have absolutely no clue what you are talking about and how crude oil is priced. It is actually scary that you dare to double down on your opinions. This is the prime example why price cap and sanctions have failed - thanks to people like you who operate on moral high grounds without having an understanding of the underlying business.
Logistics from Russia to India is between $4 to 10$ per barrel depending on port of departure (Baltics for REBCO gets 10$, Kozmino for ESPO gets 4$), Russia to China is between 2$ to 13$. You still had to transport Russian oil before and pay that price - so its not really a shocker. Urals still flows to Europe to this day via pipelines to countries like Serbia, Hungary and etc. Urals oil prices on a delivered ex-ship basis in Indian ports were stable at a discount of around $5 per barrel to dated Brent. Russian oil ALWAYS traded at a discount to dated Brent as its a heavy sour which not all refineries can take. Russian exporters margin net of taxes is between 150-200$ per tonne (it went down to about 50$ in March 2020 when dated brent dropped to 20ish). Russian production is not "hampered" yet, its about 9m barrels/day. It will take
decades for sanctions to damage Russian capacity to produce oil as they are more or less self sufficient in technology for oil production and refining as USSR somehow managed to produce oil for over a century without western tech. Oil production doesn't require sophisticated chips and Russians have strong education for geoscience, engineering and trading that allows them to compete with international oil companies.
There are only two ways here to fight Russia on their own football field - force India and China to hurt their own economies by stopping Russian oil cold turkey (not going to happen) or agree with Saudis / OPEC to drop oil price to 20$ish for a year or two (good luck with that) or option three - increase domestic production in US to flood world markets and push prices down (but you have to deal with ESG crowd and Democrats who will cry foul that you are investing in oil assets).
This post was edited by Malopox on Jan 7 2024 12:34am