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Goldman: Russia May Have Received More For Its Crude Than Quoted Prices Suggest

Moscow’s trade partners have increasingly paid more for Russian crude than quoted prices suggest, Goldman Sachs said in a note, cushioning Russia from the impact of Western sanctions.

The bank in a note dated 10 February estimated that the gap between the average effective price paid and the quoted price has widened since last March, and reached around $25 per barrel in December.

“We argue that the resilience in production so far may partly reflect that the effective price paid for Russian oil appears significantly greater than the quoted price assessments,” Goldman said.

In response to the latest Western sanctions, including price caps designed to limit Moscow’s revenues, Russia said on Friday it would cut oil production by 500,000 barrels per day, in March this year.

International Brent crude spiked to levels close to all time highs following Russia’s invasion of Ukraine nearly a year ago, but later eased and Russia’s benchmark Urals blend has traded at deep discounts as European buyers have shunned it.

On Friday, Brent was trading around $82 per barrel.

Russia’s State Duma introduced a bill late on Saturday setting discounts for Russian oil exports, which typically trade at a discount to dated Brent, according to the lower house of parliament’s website.

Goldman Sachs last week lowered its oil price forecasts for this year and next but said it still expects prices by December to rise gradually to $100 PER barrel.

By CityAM


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  • Mamdouh Salameh on February 19 2023 said:
    Despite preferential prices Russia has been offering its main customers, these prices are only few dollars less than the Brent crude price prevailing at the time. Moreover, no one except Russia and its oil companies know exactly what the discounts are.

    Therefore claims about discounts exceeding $30 a barrel being offered for Urals crude and other Russian crudes are deliberate disinformation aimed at giving the impression that Russian oil exports and revenues are being adversely affected by Western sanctions, bans and the oil price cap.

    Nothing is further from the truth. The proof is that Russia’s exports of crude and petroleum products averaged 7.8 million barrels a day (mbd) in 2022 and are continuing at this level in 2023. Exports may drop a little after March when Russia cuts production by 500,000 barrels a day (b/d) in retaliation against the Western cap. However, Russian oil revenues won’t decline because oil prices will most probably go up as a result of the cut and also rising Chinese imports projected to range in 2023 from 12-13 mbd.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert

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