In key markets, Russian oil is becoming tight. Russia is concerned about the increase in supplies of raw materials to Europe from Saudi Arabia, but Iran can create even more problems for Russian oil companies.
Problems in Europe, where traditionally about 70% of Russian oil is exported, arise against the backdrop of a recession in the Russian economy. The oil and gas industry provides half of the country’s budget revenues and a fall in raw material prices was a blow to the Russian economy, which suffered from international sanctions. The emergence of Iranian oil in the markets may further exacerbate the current situation.
The bottom line is that the refineries of Eastern Europe are focused on the processing of Urals oil, and the Iranian oil is the closest to it. Before Iran imposed sanctions on Iran in 2012, Iran supplied its European customers about 600,000 barrels of oil per day, which was 17% of the total production in the country. Immediately after the lifting of sanctions, the priority of the Islamic Republic will be the restoration of the lost market share, regardless of any prices. At the same time, Iran’s marketing will be very aggressive.
The return of Iranian oil to the markets could lead to an increase in the spread between Urals and Brent from current values of $ 0.80 bbl to $ 1.50 bbl as early as 2016. Brent crude currently trades below $ 45.00 bbl. Since June 2014, oil prices have fallen by 60%. The losses of the Russian budget due to the growth of the spread between the standards can reach about $ 420 per day and by 2016 will reach $ 153 million, which is 0.4% of the planned revenues for the next year.
In October, the head of Rosneft Igor Sechin said that Saudi Arabia, invading traditional markets for Russia, actively dumping. Apparently, the largest oil producer in OPEC is preparing to strengthen competition in the struggle for market share and thus wants to conquer European markets. Together with the Saudis, Iraq is actively dumping, which yesterday announced a significant increase in discounts on its oil – $ 5.25 per class, which is four times the Saudi Arabia’s $ 1.25 rebate. In addition, according to Bloomberg, Iraq for the last two Week shipped and sent 10 supertankers to the US with 19 million barrels on board, which became the largest party since June 2012.