Referring to Mr. Weafer's data, Vedomosti writes that the Russian budget could have received an additional $2.4 billion, and Russia's oil companies an additional $600 million ($3 billion in total) if the spread had remained the same. Mr. Weafer, who estimated Russia's 2004 oil revenue at $55 billion, is sure that the spread will reduce soon.
According to Vladimir Milov, the president of the Institute for Energy Policy, lower demand for Urals crude is due to tighter environmental requirements. European refineries want oil with a lower sulfur content, which comes primarily from Iraq and the United Arab Emirates.
A manager with a Russian oil major said Russia was flooding its own market. While the Brent price depends only on supply and demand, the Urals has a certain critical demand in Europe. Meanwhile, an unexpectedly sharp increase in supply of oil from Primorsk increased pressure on the price first in Rotterdam and then - as a result of arbitrage supplies - in the Mediterranean.
"A decisive blow on the high-sulfur crude market came with increased production of this oil in Iraq," the manager said. He argues the trend can only be broken if Russia starts working on non-traditional markets in North America and Southeast Asia.
