Russian Oil Prices Reach 13-Year High Amid Escalation in Iran Conflict

Russian Crude Prices Reach 13-Year High Amid Global Oil Rally

Russian crude prices have surged to the highest level in over 13 years, benefiting Moscow from the global oil rally linked to the Middle East conflict. According to data from Argus Media, Russia's flagship Urals crude reached $116.05 a barrel on April 2 in the country's port of Primorsk, the largest oil-export facility on the nation's Baltic coast.

The price of Urals crude is significantly higher than the average $59 a barrel assumed in Russia's budget for this year. This windfall oil revenue is easing pressure on the Kremlin's finances as it continues its war in Ukraine. The global oil rally has been driven by the Middle East conflict, which has effectively choked off about a fifth of the world's oil supplies going through the Strait of Hormuz.

US President Donald Trump has set a deadline of 8 p.m. Eastern Time on Tuesday for Tehran to open the critical waterway or face the destruction of key infrastructure. Meanwhile, in Russia's Black Sea port of Novorossiysk, Urals crude reached $114.45 a barrel on Thursday, according to Argus Media. The average discount of Urals from Russia's western ports to the global benchmark Dated Brent narrowed to below $27.75 a barrel, the lowest since mid-December.

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The delivery spread between Urals and Brent has widened, with Urals trading at a premium of $6.1 a barrel compared to $3.9 two weeks ago. However, it is unclear whether this premium ultimately accrues to Russia. Moscow's ability to benefit from the global crude rally is undermined by Ukrainian attacks on oil-export infrastructure and refineries, which have led to loading disruptions and curbed Moscow's revenues from commodity exports.