Traders reported losses of Russia from the return of Iranian oil to Europe

The difference between the price of Russian export blend Urals and North sea Brent increased to $2.4 per barrel, reports Bloomberg, citing data from the traders that monitor the Platts quotations. The gap in prices was the biggest since June 2014. In the course of trading on 17 June, the largest oil trader Vitol made an offer to sell Urals with little discount, but found no buyers.

According to four traders surveyed by Bloomberg, Russia’s Urals blend, which in composition resembles the main oil product of Iran, received the greatest benefits when Tehran was prohibited in Europe in connection with imposed in 2012 sanctions. Now the lifting of the restrictions has a negative impact on Urals.

“The Iranian exports was impressive, providing oil refineries in Europe a wide range, said Bloomberg analyst at Natixis SA Abhishek of Despond.

According to Bloomberg, citing data from the International energy Agency (IEA), Iran acts quickly, trying to regain market share lost during the sanctions. Last month the export volumes of Tehran has reached 2.1 million barrels per day, approaching pre-sanctions level. Before four years ago limitations took effect, Iran shipped abroad 2.2 million barrels of oil per day. In may of this year the volume of deliveries of Iranian oil to EU countries amounted to 355000 barrels per day. In April, the figure was 20 million barrels below. “Iran acts without delay, returning to its European customers”, — stated in the message of IEA.

In early June, the Director of the Department of international relations of National Iranian oil company (NIOC) Mohsen Kamsari said that the company has signed contracts for the supply of oil with companies from Italy, Spain and Greece. We are talking about supplying the companies of Saras and Iplom (Italy), Repsol (Spain) and Hellenic Petroleum (Greece). Comcare also added that NIOC has resumed talks with the Dutch-British Shell. He expressed the hope that soon Iran will be able to enter into a contract with that oil company.

According to traders surveyed by Bloomberg, negatively affects the price of oil and the problem with the busy Italian port of Trieste, which is the main transportation hub for oil refineries in Eastern and Central Europe. April in Trieste was unloaded just four vessels with 1 million barrels of oil each, whereas in the first quarter of this year, the port’s capacity was allowed to unload in four vessels per month. However, according to DNB Markets, a series of strikes at French refineries last month led to a reduction in consumption.

“This is a natural situation for Urals against the background of how Iran is stepping up the pace [of oil production], and several European refineries conduct of a strike, reducing demand,” said Bloomberg chief DNB Markets oil analyst Torbjorn Kjus.