Russia's flagship Urals crude has been shunned by its previously top customers, many of whom have committed to reduce dependence on the country's oil. However, with hefty discounts on offer, the grade has been redirected to other markets and has found a growing outlet in Turkey, according to Urals traders and ship-tracking data.
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According to Urals traders, three key buyers have become the main focus of the seaborne market since Russia's invasion of Ukraine -- China, India and, increasingly, Turkey.
In March, 7.42 million barrels of the grade were bound for Turkey, according to Kpler shipping data. In April so far, three Aframax cargoes have already loaded bound for Aliaga in Turkey.
Turkey was previously a regular Urals buyer but took much lower volumes in February, accounting for just 2.71 million barrels, the data showed.
Refiners there that have processed the grade include Tupras, the country's main refiner, and STAR, a refinery owned by Azerbaijan's Socar, which has a share in the production of Russian Urals and Siberian Light.
Turkey has not announced any plans to cut down on Russian imports since its invasion of Ukraine but has supplied weapons to Ukraine and has been acting as a mediator between the two sides.
Mediterranean Urals was last assessed by S&P Global Commodity Insights at an all-time low relative to Dated Brent of minus $34.54/b, CIF Augusta.
The distress prices on offer were making Urals very attractive to buyers willing to take the diverse risks involved in buying and refining it, and the growing outlet in Turkey was greatly aided by the simplicity of shipping cargoes there, according to one Urals trader.
Still, it was not the case that the historically largest buyers of Urals crude had completely cut their purchases. The same shipping data showed that a couple of April-loading cargoes were bound for Repsol's Cartagena refinery in Spain and one was headed to Neste's Porvoo refinery in Finland.
Outside of Europe, Chinese and Indian buyers have ramped up their Russian crude purchases, though Urals has been embraced by India more so than China, traders said.
"All [Russian] ESPO is going to China at very low levels. It is the perfect crude for them to process," a second trader said. "Urals is finding more support from India rather than China because of the shipping distance but also because of refinery processing. For Indian refiners [Urals] is like a soft drink."
While seaborne flows have been dramatically redirected, it is important to remember that Europe is still a big buyer of Russian Urals, the first trader said, having not yet cut its reliance on imports through the Druzhba pipeline system.
Despite widespread predictions among industry analysts of reduced supply, Russia plans to export even more of the grade in April. Seaborne loadings are scheduled for their highest level in nearly three years at 9.26 million mt, according to a loading schedule seen by S&P Global.