Discounted sale: discount on Russian oil has increased dramatically
Russian oil continues to fall in price. According to Argus Media, Urals prices dropped to $33-34 per barrel in the last decade of December. The decline is explained both by the general decline in oil prices and by the expansion of the discount of the Russian blend to the Brent North Sea benchmark caused by the tightening of US sanctions against the domestic oil industry. At the same time, Russia increased exports in physical terms in December. Izvestia investigated whether this would be enough to compensate for the drop in prices, and what would happen to oil and gas revenues at the end of the year.
Discount — $27
According to Argus Media pricing agency, on Friday the price of Urals in the Baltic Sea ports dropped to $34.82 per barrel, and in the Black Sea — to $ 33.17. At the same time, the price of the Dated Brent variety, which serves as an international benchmark, was about $61. This year, its decline, although significant, was less than the decline in prices for Russian raw materials.
In October, the administration of US President Donald Trump announced widespread sanctions against Russia's two largest oil producers. Although this step did not stop export flows from the Russian Federation, it made their implementation more difficult. In particular, India is expected to receive fewer barrels from Moscow next month.
Argus estimates that the Urals discount at export points averages about $27 per barrel. By the time oil reaches India, this discount is reduced to about $7.5 per barrel.
In this case, two circumstances are important. First, the cheaper oil becomes, the greater the financial incentive for refineries to turn a blind eye to sanctions in order to buy it. In the past, such dynamics have already led to the fact that Russian oil prices have stabilized after an initial drop. Secondly, not all of Russia's export oil belongs to the Urals. East Siberian pipeline oil has its own labeling and is supplied at separate prices. Thirdly, due to the complex logistics, it remains unclear how much of the margin for delivery ends up at the disposal of Russia.
The discount doubled
According to Tamara Safonova, associate professor at the Institute of Economics, Mathematics and Information Technology of the Presidential Academy, the share of Urals grade oil in total Russian oil exports for the first 11 months of 2025 is estimated at 48%. Urals is transported to world markets through the ports of Primorsk, Ust-Luga, Novorossiysk and via the Druzhba pipeline.
Kirill Chernovol, a researcher at the Gaidar Institute's Laboratory for the Analysis of best international practices, notes that, according to Bloomberg data based on vessel tracking, in the four-week average for October 2025, sea shipments of Russian oil amounted to 3.74 million barrels per day, of which 2.3 million were at the ports of Primorsk, Ust-Luga and Novorossiysk.
— Urals oil is the base export grade in these areas. Thus, we can assume a share of about 60% of maritime exports," he added.
Nikolay Dudchenko, an analyst at Finam, believes that it is difficult to give an accurate estimate of the Urals share, but it is approximately 60 to 80% of the total volume of Russian oil exports. That is, falling prices and a huge discount affect a very large part of our supplies.
According to Tamara Safonova, the US sanctions do not apply to restrictions on the sale and transportation of Russian energy resources.
— However, at the moment, there is no need to talk about the balance and validity of pricing for Russian energy resources: many Western analytical agencies have included an unreasonable discount on marker grades of Russian oil in relation to reference quotations, which has increased 2.4 times for Urals oil since the introduction of OFAC sanctions on October 22. The average price of Urals in November 2025, according to the Russian Ministry of Economic Development, dropped to its lowest level in the last four years against the background of non—market discounting of the cost of Russian energy resources on world markets, the expert stated.
She added that market participants are actively reacting to events related to the sale of foreign assets of Russian oil giants, but the price indices that have emerged after the introduction of OFAC sanctions are clearly speculative.
Record exports
Meanwhile, Bloomberg reported that in the four weeks to December 21, Russia shipped 3.87 million barrels of oil per day, which is the highest figure since May 2023. The sharp increase is due to the restoration of supplies from the port of Primorsk in the Baltic. In addition, at least 20 tankers transporting oil from Moscow are awaiting permission to enter ports in China and India. Thus, we see that an increase in the discount can be offset by an increase in supplies.
Tamara Safonova believes that the growth in export volumes cannot compensate for the loss of income, new approaches are needed to reduce discounts on Russian oil.
In October, Urals export prices from the Baltic/Black Sea were estimated at about $55 per barrel, and now they are at $34, Kirill Chernovol states.
— This is a drop of about 38%, which means that in order to maintain the same revenue, volumes need to be increased by more than 60%. Even with an increase in sea shipments in the fall (for example, S&P Global recorded 4.11 million barrels per day in October as a high level of sea exports), this is not enough to cover such a decline in prices," the source concluded.
He also noted that, according to the International Energy Agency, in November 2025, Russia's total oil and fuel export revenues decreased to $10.97 billion, while export volumes decreased by about 0.4 million barrels per day.
— That is, in fact, there is a simultaneous decrease in both prices and export volumes in November compared to October, — concluded Chernovol.
In many ways, the fall in November was recouped in December, as supplies that were delayed for many reasons reached consumers. This led to a local maximum. And yet, according to Nikolai Dudchenko, from the point of view of the total revenue of companies and, consequently, oil and gas revenues (NGD) of the budget, this is not enough.
— The average export volumes in December are indeed still higher by about 300-400 thousand barrels per day than in November. However, at the moment, we believe that the implementation of the NGD plan for 2025 is still questionable and the growth in exports may not be enough to completely cover the losses from lower prices. In addition, it is also worth recalling that the average exchange rate of the US dollar continues to decline against the ruble, which also negatively affects the final result, the expert points out.
The latter factor is playing an increasingly important role for the oil industry (and for the budget). Objectively, the dollar exchange rate is low now, and the financial authorities are not making any attempts to raise it yet, because they consider the stability of the exchange rate more important than just the fact of a "weak" or "strong" ruble. Companies operating in the export market are likely to put up with the reality of low incomes in the foreseeable future. This applies primarily to oil companies.
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