(Bloomberg) — Russia’s flagship oil price plunged to the lowest in over 2 1/2 years last week, with days to go until US sanctions are due to hit the nation’s two largest producers.

The price of the nation’s Urals grade plunged as low as $36.61 a barrel from the Black Sea port of Novorossiysk on Thursday, the lowest since March 2023. It was a similar trend in the Baltic Sea, according to data from Argus Media. Both prices edged up on Friday.

For Russia’s oil companies, the price slump will put a strain on their finances and reduce the amount of tax they pay into the Kremlin’s coffers, helping to fund the war in Ukraine. Oil and gas accounts for about a quarter of the nation’s state budget.

Demand for Russian cargoes on international markets slumped after US President Donald Trump’s administration blacklisted Rosneft PJSC and Lukoil PJSC on Oct. 22 to add more pressure on Russia’s President Vladimir Putin to end the war in Ukraine. 

The Nov. 21 deadline is to allow a wind down of dealings with Russia’s two energy giants, but some refiners in China, India and Turkey are already pausing purchases of cargoes and seeking alternative supplies. 

Urals has started trading at big discounts to international benchmarks in the wake of the sanctions announcement. 

Discounts on Urals from the two regions deepened to an average of $23.52 a barrel against the Brent benchmark at the end of last week, the widest since June 2023, Argus’s data show.

That points to buyers being wary of handling Russian barrels. The US has flagged the potential for secondary sanctions for those that do. 

Even by the time the barrels get shipped to China and India, Urals remains several dollars a barrel cheaper than Brent, a measure that doesn’t include the cost of delivery, Argus data show.

© 2025 Bloomberg L.P.