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US sanctions against Iran and Venezuela have resulted in an increase in demand for Russian crude oil, as Bloomberg stated.

The agency has calculated that this has increased the revenue of exporters from Russia by almost $ 1 billion over the past eight months.

Russian oil companies received at least $ 905 million of additional revenue between November 2018 and July 2019, according to Bloomberg. Such data was demonstrated by the agency’s calculations of the spread difference (the difference between selling and buying prices) for Urals oil brand in relation to Brent brand for this period in comparison with the five-year average.

One of the reasons for this growth, according to Bloomberg, is the US sanctions against two major oil exporters - Venezuela and Iran. Another possible reason is a decrease in the production of raw materials by the members of the Organization of Petroleum Exporting Countries and their partners.

As a result, Russian Urals oil began to be regularly traded at a premium in relation to Brent, as Bloomberg writes. “There is a shortage of heavier and more crude oil on the market due to the sanctions against Iran and Venezuela”, as the agency quotes the JBC Energy analyst Konstantsa Rangelova. She noted that Urals was trading at a record high in the Mediterranean region. In the near future, the spread for Russian oil may be reduced due to the end of the summer car season and the beginning of autumn maintenance at European oil refineries, Rangelova thinks.

Although heavy oil is considered to be of lower quality, some refineries are designed to work precisely with this raw material, and reformatting them is expensive, as Bloomberg notes. Exactly such fuel was exported by Venezuela and Iran. The United States limited the purchases of Iranian oil in November 2018 with exceptions for a number of countries that were not extended by Washington in May 2019.

The sanctions against the PDVSA Venezuelan state oil company were imposed by USA in January. Urals typically traded at a discount in relation to Brent: during the past five years, the difference has been around $ 1 in the Mediterranean region and $ 1.63 in Northwestern Europe, as the representative of S&P Global Platts confirmed to Bloomberg. The difference began to decrease in November 2018, since then the premium on Urals has reached $ 1 in the Mediterranean region and $ 0.86 in Europe.