Russia's Oil Losses Following Iran's Return to European Markets

Bloomberg reports that Iran's return to international oil markets has harmed Russia's oil position, forcing the country to sell its oil at the highest discounts in two years. According to Bloomberg, the price difference of Russian 'Urals' oil in the Mediterranean region compared to the North Sea Brent benchmark has reached $2.4 per barrel, the lowest price for Russian oil since June 2014. Bloomberg further notes that on Friday, Vitol offered oil at a lower discount again, but 'found no buyers for it.' Urals oil, which is qualitatively similar to Iranian export oil, had benefited the most since the imposition of oil sanctions against Iran in 2012. However, following the lifting of sanctions in January this year due to the nuclear agreement known as the JCPOA, Russian oil has faced losses. Bloomberg quotes a market analyst from Natixis stating that Iranian oil exports have been significant and have given European refiners more options. According to oil traders, challenges in unloading oil shipments at the Trieste port in Italy – a major hub for refiners in Eastern and Central Europe – have also contributed to this price pressure, slowing the loading process at the port's dock, with only four ships, each with a capacity of one million barrels, having loaded there since the beginning of April, whereas an average of four ships per month had loaded there in the first three months of this year. Meanwhile, DNB Markets, Norway's largest investment bank, reported that strikes at French refineries last month led to a decrease in crude oil purchases. According to Total, three out of five refineries operated by the company have not yet fully resumed operations. The International Energy Agency states that Iran is rapidly regaining its share in the oil market. The agency reported on June 14 that Iran's exports reached two million one hundred thousand barrels per day last month, nearly equivalent to pre-sanction levels. According to the agency, before the sanctions four years ago, Iran exported two million two hundred thousand barrels of crude oil per day and is now quickly reclaiming its European customers. According to statistics compiled by Bloomberg, Iran's oil exports to EU countries were 330 thousand barrels per day in April, which increased to 355 thousand barrels per day in May.