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Total ramps up Urals, North Sea crude oil interest as Iranian exports exit European market

Энергия | Energy Transition

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Total ramps up Urals, North Sea crude oil interest as Iranian exports exit European market

London — French energy major Total has increased its buying of Russia's medium sour Urals crude and North Sea crudes in August, as the company seeks to replace Iranian crude it will no longer be able to lift due to sanctions.

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Trading sources said Total's buying interest at the start of the August trading cycle has been much stronger than previous months for Urals. "Total is definitely on the buying side [in August] that's for sure, with the assumption that they're replacing Iranian barrels," said one Urals crude trader.

A second trader said: "Total has not been lifting Iranian for some time now -- one and a half months -- so now they would be re-buying their sour requirements. It's back to the previous diet of Urals, like it was when there were sanctions before."

A source close to the matter said that the company was looking to replace its Iranian sour crude supply. In recent trading sessions, the company has bought at least six 100,000 mt Urals cargoes loading out of the Baltic ports of Primorsk and Ust-Luga.

Trading sources said Total was the buyer of four cargoes from Russia's Surgutneftegaz's tender that closed Wednesday -- for two cargoes loading out of the Baltic port of Primorsk on August 10-11 and August 13-14 and two cargoes loading in Ust-Luga for August 10-11 and August 14-15. Pricing levels for the tender were heard in a range of Dated Brent minus $1.55/b-$1.45/b. A Total representative confirmed it was the winner of the tender, while a representative from Surgutneftegaz was not immediately available to comment.

Previously, Total confirmed it was the buyer of the two Urals cargoes from Surgutneftegaz's Monday tender, with pricing levels around Dated Brent minus $1.80-$1.70/b.

The company also bid for and was sold a 100,000 mt cargo in the Platts Market on Close assessment on Monday from Vitol. On Wednesday, Total was also seen bidding in the MOC on Wednesday for a 100,000 mt Urals cargo, loading August 11-15 but withdrew the bid before the end of the MOC.

Europe has been a key outlet for Iran's oil, taking around 700,000 b/d, or a third, of Iranian crude exports, and Total was one of the largest buyers in Northwest Europe, taking on average 70,000-120,000 b/d. International buyers of Iranian oil have until November 4 to wind down contracts before the US reimposes sanctions on the oil, energy, shipping and insurance sectors, according to the US Treasury Department. However, many European companies, including Total, have stopped buying or drastically reduced Iranian crude purchases ahead of the November deadlines.

In the company's search for alternatives, Total was also seen bidding for a range of North Sea BFOE grades this week, contributing to the strong bidding interest seen in Dated Brent since the start of the week, which saw Dated Brent move up $1.825/b over the course of only three trading sessions to $73.98/b.

On Monday, Total was last seen bidding for Oseberg over August 13-15 loading dates at a $1.20/b premium to Dated Brent during the Market on Close process, and Brent Blend over August 10-12 at a 55 cents/b premium.

Despite the recent build in crude volumes currently on water in the North Sea, these barrels were heard as largely committed.

Total's bids on North Sea grades this week did not result in trades during the MOC process.

--Gillian Carr, gillian.carr@spglobal.com

--Ahila Karan, ahila.karan@spglobal.com

--Edited by Maurice Geller, maurice.geller@spglobal.com