Russian Oil Discounts to Narrow to $17 for Urals, $10 for ESPO by Q4 - Analyst

MOSCOW, April 24. /TASS/. Discounts on Russian oil will continue to decline in 2026, even if the Strait of Hormuz is opened, said Andrey Polischuk, senior oil and gas analyst at Euler. The analyst expected the discount on Urals crude oil to decrease from $28 per barrel in Q2 to $17 per barrel by Q4. For ESPO crude (East Siberian crude supplied primarily to Asia), the discount could drop to $10 per barrel. Before the escalation of the situation in the Middle East, the average discount on Russian oil was around $30 per barrel, but it has begun to decrease, Polischuk noted. "We see it's going down now. We believe that will continue. Discounts will narrow. We expect around $17 for Urals and about $10 for Eastern oil by Q4," he said. The analyst also believes that even the opening of the Strait of Hormuz, a key route for oil supplies from the Persian Gulf countries, will not stop this trend. "I don't think so, because the process of discounts reduction has already begun. And it seems to me that Russian oil has proven itself to be more reliable than other grades, in fact. And overall, buyers already view it as more reliable. These discounts should gradually decline," he explained. A further reduction in discounts will largely be due to cheaper freight, the cost of seaborne oil transportation, which remains elevated, Polischuk said, adding that "with normalization, freight will decrease, and the discount at Russian ports will also decrease."