Discounts on Russian crude oil are shrinking as Moscow regains pricing leverage in a tight energy market

After selling barrels at steep discounts, Russia regained pricing power for its crude oil.

ESPO crude, Russian oil from the Far East end of the country, is changing hands at a discount to the benchmark price of Asia's benchmark price.

Russia's key export to Europe, the Urals crude, is being sold at a discount of between $20 and $25 a barrel compared to a discount of $35 in April. Most of the buyers of the crude were in Germany before the war began.

Moscow was able to find other customers for its oil after the West stopped buying it. Most of the 1 million barrels per day that European refineries stopped buying is going to Asia and the Middle East.

Russian crude has seen an increase in demand in southern Europe and the Mediterranean region ahead of the EU embargo.

The oil market is still tight. Despite a steep drop in global crude prices, supply growth has been relatively slow.

US companies have refrained from big increases in production, and the Organization of the Petroleum Exporting Countries has agreed to only small growth in output.