By Rachel Graham and Stephen Bierman
Russian Urals crude's discount to the benchmark Dated Brent widened to the most in 30 months after the nation increased shipments to Europe amid a pricing dispute with Belarus.
Urals export blend for delivery in northwest Europe dropped to $3.30 a barrel below the price of Dated Brent today, compared with $3.13 yesterday, according to data compiled by Bloomberg. The discount was as little as $1.67 on Jan. 7.
The widening discount "is to a large extent a knock-on effect of Russo-Belarussian relations," Vienna-based researcher JBC Energy GmbH wrote in a report. "The hope for Urals is that the lower feedstock prices will encourage European refiners to run more of the crude."
Russian producers halted deliveries to Belarus refiners at the start of this month after the two countries formed a customs union, canceling export duties on Russian oil. The companies have yet to agree on new pricing for the untaxed oil.
The oil producers want a price that will give them as much as 50 percent the profit Belarus refineries will make on sales of products made from untaxed Russian oil, Kommersant said, citing an unidentified person in Russia's Energy Ministry.
About 650,000 metric tons of oil has been rerouted to the ports of Gdansk and Primorsk or sent to Europe via the Druzhba link, OAO Transneft Chief Executive Officer Nikolai Tokarev said in a Jan. 18 interview.
Belarus's Mozyr refinery, which has a capacity to process 323,000 barrels of oil a day, usually receives supplies via Russia's Druzhba pipeline to Europe.
Russian Prime Minister Vladimir Putin is meeting with his Belarus counterpart Mikhail Myasnikovich in Moscow today.
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