The increase in the discount is a consequence of heightened sanctions risks at the end of October, when the United States imposed restrictions on two of Russia's largest oil companies.

Overall, this is typical for the oil market: the discount of Urals to Brent tends to widen during the initial weeks and months following the tightening of sanctions. This was evident in the second quarter of 2022 when, following the EU’s decision to impose an embargo on maritime oil supplies from Russia, the discount temporarily exceeded $30 per barrel.

ESPO crude, being closer in its physicochemical properties to Brent and other low-sulfur grades, generally commanded a premium over Urals on the spot market even before 2022.

Historical trends suggest that investors gradually acclimate to new levels of sanctions risk, so it is anticipated that the discount will begin to narrow no later than early 2026.

Source: Vedomosti