MOSCOW Aug 18 Russian Urals crude weakened for
an eight straight trading day on Monday due to weak European
refining demand, falling well below $100 a barrel for the first
time in a year in a move to increase the pain for Russian state
finances amid Western sanctions.
Russia has balanced its budget at $114 a barrel this year as
President Vladimir Putin is ramping up social military spending
amid a conflict in Ukraine, which sent relations between Moscow
and the West to their worst since the end of the Cold War.
Sanctions are expected to slow new Russian oil projects,
compounding a decline in output in the last months from the
world's largest producer.
Global oil prices have been falling despite the conflict in
Ukraine and violence in Iraq due to poor demand from the weak
global economy and booming U.S. oil supplies.
"The geopolitical premium has fallen close to zero," said
analysts from Nordea bank.
Analysts said declining oil prices would heavily weigh on
the Russian stock market and the rouble, which is already
trading near its all-time lows. Russia's $2 trillion economy
depends on energy-related taxes for half its budget revenues.
On Monday, Urals crude in the Baltic traded at below $98 a
barrel, its lowest since May 2013, the last time Urals traded
under $100 per barrel for a prolonged period of time.
In the Mediterranean crude market, where oil supplies are
slightly than in the Baltic, Urals was trading at below $99 a
The pressure on Urals will likely increase as preliminary
September loading dates showed healthy supply levels
In more bearish news, oil firm Surgut tendered to sell four
early September cargoes in the Baltic and
Rosneft also tendered to sell 0.3 million tonnes from the Baltic
and 0.22 million tonnes from the Mediterranean.
Results are due later this week.
In the Platts window, Total bought a 80,000-tonne Urals
cargo from Vitol in the Mediterranean at dated Brent minus 70
cents a barrel, some 35 cents weaker than previous price
estimates, traders said.
BP offered a larger Suezmax at dated Brent minus $1.00 per
barrel, some 45 cents weaker than previous price estimates but
found no buyers.
Lukoil sold a cargo of CPC Blend to Eni at dated Brent minus
75 cents, some 20 cents weaker than previous price estimates,
In the paper market, Urals was expected to weaken in
September to dated Brent minus $1.15 a barrel while in the
Baltic it was expected to stay at the current levels of dated
Brent minus $2.
(Reporting by Dmitry Zhdannikov and Gleb Gorodyankin; Editing
by William Hardy)