With global oil markets in turmoil and major benchmarks Brent and Dubai in severe need of repair, Russia is stepping up efforts to promote its Urals export blend as a new global crude marker. The market seems to have little desire to see Urals in such a role, but Moscow’s thinking is clear-as the world’s biggest oil producer, Russia should have greater influence over global oil pricing, and could via Urals offer an alternative to Brent and Dubai that would have none of their well-documented problems with limited physical volumes. The physical flow of Brent is declining in line with the rest of the North Sea’s oil production, while Dubai’s limited volumes make it vulnerable to distortion, as recent aggressive buying by China has underlined (PIW Dec.28’15). Price-reporting agency Platts has addressed Brent’s liquidity issue by adding new grades-Forties, Oseberg and Ekofisk-to the pool deliverable against the benchmark, but production could fall again in a year or two. With a view to securing the Brent benchmark’s long-term viability, Platts this month announced the creation of an additional c.i.f. Rotterdam spot Brent assessment, based on the existing Brent-Forties-Oseberg-Ekofisk (BFOE) basket of deliverable grades, but with scope to ultimately include crudes from the US, Russia and West Africa. These crudes could include Urals, but it is not traders’ first choice. Platts’ existing spot Brent assessment is based on f.o.b. prices at the Sullom Voe terminal in the UK’s Shetland Islands.
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