Russia is offering its oil at greater discounts than those granted by Venezuela in the Chinese market due to the sanctions it faces after starting a war with Ukraine. This was stated by the economist Pilar Navarro, an energy analyst for Latin America at the firm Medley Global Advisors.
In an interview for the specialized media petroguideNavarro explained that despite the higher discounts, it is not a direct competition because in terms of quality, Venezuelan oil is heavier and crude in Russian It is light.
In addition, he pointed out that it should be taken into account that the sanctions on Russian oil are lighter, compared to those applied to Venezuela.
“We see how Venezuela’s discounts are between 25% and 26%, which represents about 30 dollars less per barrel, when compared to Brent crude and Russian oil is quoted at a discount that is around 30 and 35 dollars per barrel,” he detailed.
Navarro indicated that, even so, “there are few exchanges and few intermediaries interested in buying that oil, so there are few interactions that feed those estimates.”
“In the oil market, the real effect of the sanctions on Russia has not yet materialized, but when there is a greater number of barrels sanctioned in the Asian market, there will be a greater number of discounts competing for the same thing,” added the economist. .
He specified that another factor to take into account is transportation costs. “Russia, like Iran, has a fleet of ships of its own, but not large enough to handle all of its exports. You have to see the shipping costs », he said.
The specialist said that we have to wait if there is some kind of agreement between Iran, Venezuela and Russia to try to coordinate and reduce the highest discounts a little.
“Venezuela and Russia are in a very tight market and that is why for the third and fourth quarters we are going to see an increase in oil prices. The effective price of Venezuela can be even higher than the current one, even with greater discounts », he added.
