© Sputnik Russia wants to see its domestic oil blends compete with Brent and WTI as primary global crude benchmarks, according to an official from the St. Petersburg International Mercantile Exchange (SPIMEX).
© Thomas Peter Russia hints at oil price discount to keep European market share
"Our goal is to take a place among the major indicators. Currently, the pricing for most of our oil exports which as well determines our budget, is in the hands of our partners,” SPIMEX advisor Segey Kvartalnov told reporters.
He added that it’s important to set a more relevant mechanism for determining a fair price for Russian crude.
Initially the Russian futures market could use the US dollar in its operations, but it could possibly switch to trading in Russian rubles and other currencies, according to Kvartalnov.
He explains that around 70 percent of the world's oil contracts are currently based on the Brent benchmark.
At the same time, he said, “the volume of Urals and ESPO Russian oil blends on the international market is twice the total volume of oil supplied from BFOE, Oman and Dubai.”
"The price of Russian oil should stop being determined by Brent or Dubai,” said Kvartalnov.
In June, the head of Russia’s biggest oil firm Rosneft Igor Sechin called for increased efforts to standardize domestic oil blends.
Russian crude from the Urals region and ESPO (crude transported through the ESPO pipeline) is currently trading cheaper than Brent blend due to lack of a transparent pricing mechanism and guarantees of delivery.
To be recognized as a benchmark on the global market, the Russian crude has to meet three requirements. It has to be traded at clear and transparent prices; the deliveries should be guaranteed; the trading volume has to be not less than 10-15 million tons per year, or three million barrels a day.