The day before, the president signed a law on the limitation of the Ural discount, according to which, from April 1, the discount of Russian Ural oil against Brent is limited for calculating oil taxes.
“Russian oil companies, even without innovations in tax law, have incentives to reduce the discount from the Urals to Brent, since their profit directly depends on this. Another thing is that buyers of Russian oil are not ready to reduce this Judging by the last few months, the market has a stable discount rate for Russian oil of $32 per barrel,” says Alexander Dzhioev, an analyst at Alfa Capital.
Igor Galaktionov, a stock market expert at BCS Mir Investments, agrees with him. Russian companies, even without tax changes, have an incentive to seek discount reductions, as every company looks for opportunities to increase revenue, he said. “The 500,000 bpd reduction figure is probably a consolidated industry view of production prospects. I think it already takes into account assumptions related to the possible state of the oil market and existing discounts. However, if the forecasts do not hold materialize, the actual discount turns out to be wider than the calculated one, difficulties may arise,” says the expert. He adds that business and government are likely to be in constant dialogue on these issues.
According to FG “Finam” analyst Alexander Potavin, significant volumes of oil from the Russian Federation in the last month began to go out according to gray sale schemes, therefore it is quite difficult to determine the real prices for such deliveries. “If the oil companies control the transportation of oil and receive their share of the profits for this, then price manipulations, the inclusion of gray middlemen in the transaction, etc., are very possible. As a result, a price is officially set, and, Buyers are paying more for Russian oil than official prices suggest in an earlier Goldman Sachs research note. /barr,” the expert explains.
In his opinion, the new mechanism for determining the price of the Urals for tax purposes is discouraging oil exports at a high discount value for Russian oil companies. Theoretically, all this can contribute to higher export prices for Russia, but at a lower production level, says the expert. “Apparently, such a scenario was signified when our authorities announced that since March they were reducing oil production in the Russian Federation by 500,000 barrels per day,” he noted.