MOSCOW, April 19. /TASS/. Russia’s decision to voluntarily cut oil production has enabled reducing the Urals oil blend discount from $34 per barrel in January-February down to $29 per barrel, Kirill Bakhtin from the Sinara investment bank said in an op-ed posted by the InfoTEK analytical center.

"The voluntary slashing of oil production by 0.5 mln barrels per day (bpd) since March has already helped to lower the spread to $29 per barrel by mid-month from $34 per barrel in January-February. Although this reduction had not fully materialized by mid-March, a tangible effect has already been achieved. We expect a Brent price of $95 per barrel and a Urals [price] of $68 per barrel on average in 2023," the expert said.

The Urals blend accounts for about 60% of oil exports, while other Russian blends are sold at slimmer discounts to global benchmark Brent, the analyst noted. For example, the ESPO [oil blend shipped via the Eastern Siberia-Pacific Ocean pipeline to Far Eastern markets - TASS] is $10-12 per barrel cheaper.

In April 2023, the ruble price for Russia’s main oil blend reached the baseline forecast for 2023 to stand at 4,800 rubles ($58.50) per barrel at a forex rate of about $1.00/80 rubles and a Urals price of $60 per barrel.

"The ruble-denominated Urals price gained 35% in April against the first quarter of this year, heralding the strong performance of oil and gas companies and the increase in fiscal revenues for the [Russian federal] budget. Metrics will be even better for those companies with access to premium crude oil export channels (ESPO, CPC, and in-house infrastructure) in terms of revenue levels (in view of the slimmer discount to Brent) and profit from operations (taxation is linked to lower Urals prices)," the expert added.

Russia earlier made the decision to voluntarily reduce oil production effective March 2023 through year-end 2023 by 500,000 bpd.