The discount on Urals crude oil compared to the benchmark Brent price is expected to decrease by 26% by the end of 2026, reaching $17 per barrel from the second quarter pricing of this year. This estimate comes from a report by analysts at Euler. They predict that the average discount in the second quarter will be approximately $23 per barrel, while in the first quarter, it stood at $32 per barrel, according to Euler's data.
The average level of discount in 2026 is projected to be $22 per barrel, in contrast to $14 per barrel in 2025. By 2027, the average discount is anticipated to revert to $14 per barrel.
Furthermore, the discount on Russian ESPO (Eastern Siberia-Pacific Ocean) crude oil compared to Brent is expected to drop by 9% to $10 per barrel by the end of this year, as assessed by Euler analysts. They estimate that in the first quarter, the figure was $18 per barrel, and it will decrease to $11 per barrel in the second quarter.
For 2026, the average discount for ESPO crude is expected to be $13 per barrel, while in 2027, it is expected to fall to $7 per barrel. The discount in 2025 was recorded at $8 per barrel, according to Euler's findings.
The discounts on Russian ESPO crude prices will gradually narrow as the influence of external restrictions on export flows diminishes, as highlighted in the report. By 2028, the discount on Urals crude is projected to decrease to $13 per barrel, while the ESPO discount may fall to $5 per barrel.
The discounts on Russian crude have risen sharply due to tightened sanctions towards the end of 2025. On October 22, the U.S. Office of Foreign Assets Control (OFAC) expanded sanctions against the Russian oil sector, citing Russia's "lack of serious interest in a peace process" aimed at resolving the conflict in Ukraine. Consequently, by November, the average discount for Urals crude had increased to a peak not seen in over two years (as reported by Vedomosti on December 1, 2025). The trend continued in the following months.
Currently, discounts are declining as companies adapt to sanctions, notably through reduced freight costs and other export expenses, notes one of the report's authors, Andrey Polishchuk, Senior Analyst for Oil & Gas and Transportation Sectors at Euler.
Prior to the tightening of U.S. sanctions in October 2025, the discount for Urals crude was reported at $12-14 per barrel, according to Euler. Analysts believe this level will not be reached again until the third quarter of 2027. Such a protracted export adaptation is attributed to the cumulative effect of the considerable number of external restrictions, Polishchuk explains.
According to Euler analysts, the average price of Urals crude is projected to reach $59 per barrel in 2026, $45 per barrel in 2027, and $53 per barrel in 2028. The federal budget for 2026-2028 has set the Urals price at $59 per barrel for 2026, $61 per barrel for 2027, and $65 per barrel for 2028. According to the Ministry of Economic Development, the average price for Urals in May 2026 was $86.52 per barrel.
Future dynamics of discounts on Russian crude oil will heavily depend on geopolitical conditions, says Sergey Tereshkin, CEO of Open Oil Market. Should the geopolitical situation improve, the Urals discount could contract to $10 per barrel or less, he notes. However, he believes that significant increases in discounts are unlikely, as the scope for intensifying restrictions against the Russian oil sector is virtually exhausted.
Managing Partner of NEFT Research, Sergey Frolov, opines that discounts in Russian crude prices will continue to tighten due to limited global crude supply, logistic improvements, and the reorientation of export flows by domestic companies.
Dmitry Kasatkin, partner at Kasatkin Consulting, states that Russian companies are adapting rapidly to the restrictions. He suggests that the blockade of the Strait of Hormuz helped lower discounts in the second quarter as buyers focused less on the origin of the crude and prioritized physical availability and pricing.
Experts assert that new sanctions against Russian oil, if imposed, may only temporarily widen discounts. However, if the armed conflict in the Middle East prolongs further, oil consumers might restructure imports, modifying delivery routes and supplier structures, warns Kasatkin. This may increase competition in the market, potentially slowing the decrease in discounts or even leading to their rise again, he cautions. Additionally, he highlights that a weakening global demand for oil and increasing supply from other producers could hinder the narrowing of discounts.
Frolov also anticipates a brief rise in discounts due to increasing production and exports from competing suppliers. Conversely, should demand for crude in China and India rise, the reduction in discounts will accelerate, he believes.
According to FNG "Finam" analyst Nikolai Dudchenko, the average price for Urals crude in 2026 is projected to be between $65-$75 per barrel. Meanwhile, Kasatkin forecasts that the average price will be higher, estimating it at $73-$78 per barrel.
Source: Vedomosti
