Platts assesses Urals crude on spot FOB basis, retain CIF Europe assessments as freight net forward calculations

• Urals spot assessments to move to FOB basis
• CIF Urals assessments to be calculated by freight net forward
• Siberian Light to be assessed with reference to moves in Urals assessments

Following extensive market consultation, Platts, part of S&P Global Commodity Insights, has switched to publishing spot assessments of Russian Urals crude on a free on board (FOB) basis and has retained its existing cost, insurance and freight (CIF) delivered assessments in Europe as freight net forward calculations, effective Nov. 1, 2022.

This is a change from the CIF delivered assessments in Europe being assessed and the FOB assessments being published as netback calculations.

This follows Platts consultation on its European oil assessments that reflect the spot value of Russian crude and crude exports from Russian ports.

The consultation was launched June 22 and the subscriber note is available here:

https://www.spglobal.com/commodityinsights/en/our-methodology/subscriber-notes/062222-platts-opens-consultation-on-european-crude-oil-assessments-that-reflect-russian-crude-exports-from-russian-ports

The consultation was subsequently extended Aug. 12 and the subscriber note is available here:

https://www.spglobal.com/commodityinsights/en/our-methodology/subscriber-notes/081222-platts-extends-consultation-period-on-european-espo-siberian-light-urals-crude-oil-assessments

A decision note published Oct. 19 is available here:

https://www.spglobal.com/commodityinsights/en/our-methodology/subscriber-notes/101922-platts-to-assess-urals-crude-on-spot-fob-basis-retain-cif-europe-assessments-as-freight-net-forward-calculations

Platts understands that European Union sanctions (Council Decision CFSP 2022/884 published June 3, 2022) will impact the merchantability of Russian crude oil in European markets.

The sanctions package imposes a complete import ban on all seaborne Russian crude oil to the EU from Dec. 5, 2022, with spot market transactions and execution of existing contracts to be permitted until then. It will also impose a ban on EU operators insuring and financing the shipping of oil from Russia to third countries.

The sanctions package includes a provision (Council Decision CFSP 2022/884 Section 13) in compliance with the principle of the freedom of transit. This section states that the prohibitions should not apply to crude oil where Russia is the exporter of record but the origin of the crude is identified as a third state.

During its consultation period, Platts received widespread support for continuing to reflect delivered Urals prices into Rotterdam and Augusta under its existing CIF assessment codes beyond the implementation date of sanctions. The increasing relevance of FOB Baltic and FOB Black Sea values reflecting export arbitrage flows to China and India was also referenced as a factor which necessitates the continuation of existing FOB assessment codes as standalone spot assessments, rather than netback calculations from the CIF assessments.

Platts has therefore moved to reflecting spot FOB values for Urals cargoes eligible to be exported outside of Europe under the existing FOB assessment codes. CIF Rotterdam and Augusta values are now calculated as freight net forwards from the FOB assessments under the existing assessment codes, reversing the previous calculation method.

In line with extensive feedback regarding the market impact of Additional War Risk Premiums (AWRPs) and freight insurance costs for loading in the Black Sea since Russia's invasion of Ukraine, Platts includes AWRP costs in its Urals CIF Augusta freight net forward calculation basis FOB loadings in Novorossiisk.

AWRP costs are published as a daily assessment under the following assessment code:

AWARA00 - Additional War Risk Premium $/b

Given its existing prevalence as an export grade to eastern markets, Platts has not made any immediate changes to its European assessments of Eastern Siberian Pacific Oil (ESPO) FOB Kozmino.

Platts acknowledges that the political governance over the merchantability of Russian crude oil in Europe may change and develop in time and it will continue to consult with market participants to ensure that its European crude oil methodology remains in line with international legal standards and market practices.

This decision relates to the following Platts assessments:

Code Assessment Name

PCAFW00 Urals Rotterdam (CIF)

AAGXJ00 Urals Rotterdam vs Med Dated Brent Strip (CIF)

AAWVH00 Urals ex-Primorsk

AAWVI00 Urals ex-Primorsk vs Med Dated Brent Strip A

AGZT00 Urals ex-Baltic

AAHPI00 Urals ex-Baltic vs Med Dated Brent Strip

PCACE00 Urals Augusta (CIF)

AAGXX00 Urals Augusta vs Med Dated Brent Strip (CIF)

AAGZS00 Urals FOB Novorossiisk Suezmax

AAHPH00 Urals FOB Novorossiisk Suezmax vs Med Dated Brent Strip

AAOTH00 Urals FOB Novorossiisk Aframax

AAOTI00 Urals FOB Novorossiisk Aframax vs Med Dated Brent Strip A

ALIN00 Urals RCMB (Recombined)

AAPYS00 Urals CIF Augusta Euro

AODFA00 Observed Delivery Factor (ODF)

AARWD00 ESPO FOB Kozmino (London Close)

AARWE00 ESPO FOB Kozmino vs forward Dated Brent (London Close)

AAGZV00 Sweet/Sour Diff NWE

AAGZZ00 Sweet/Sour Diff Med

In light of the impact of sanctions on export volumes of Siberian Light crude, Platts publishes its CIF Augusta assessment (AAHPK00) with respect to movements seen in the Urals CIF Augusta assessment.

These assessments appear on Platts Global Alert and Platts Crude Alert pages 1210, 1220, 1221, 1224, 1617; in Crude Oil Marketwire and Oilgram Price Report; as well as in the Platts price database under the codes above.

Please send all feedback, comments or questions to europe_crude@spglobal.com and pricegroup@spglobal.com.

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