By Rhod Mackenzie
Exports of oil and oil products from Russia in June decreased by 600 thousand barrels per day compared to May - to 7.3 million b / d, which is the lowest since March 2021, according to the monthly report of the International Energy Agency ( IEA).
At the same time, oil exports decreased by 0.5 million b/d to 4.7 million b/d, and oil products by 0.1 million b/d to 2.6 million b/d. Experts attribute this to the completion of overhauls at refineries and the transition of some fields to summer maintenance.
Estimated export earnings fell by $1.5 billion by May to $11.8 billion, almost half of what it was a year ago ($9.9 billion less, with exports losing 0.3 million b/d in volume).
"Moscow has pledged an additional 500,000 bpd of export cuts from August to stem the decline in prices and revenues, but may keep production flat as domestic demand for oil rises seasonally," the IEA said .
Thus, oil production in Russia in June generally remained stable at 9.45 million b/d, as the decline in exports was offset by higher refining volumes within the Russian Federation. That is, Moscow fulfilled its promise to reduce production to the level of February.
The total production of oil, condensate and wide fraction of light hydrocarbons (NGLs) in June was relatively stable compared to May at 10.75 million b/d. According to the agency, the average level of oil production in the country will be 10.87 million b/d in 2023, which is 220 thousand b/d less than last year.
Although the data for June is not yet final, the IEA notes that known loadings in many destinations, including China and India, have declined, with Turkey's oil imports falling by 70,000 b/d in the month to 190,000 b/d. The IEA writes that the category "other destinations" (an increase of 150,000 b/d per month) includes other countries of the former USSR, as well as the United Arab Emirates, Saudi Arabia and Cuba.
Of the oil products, exports of fuel oil (-210,000 b/d) and naphtha (-25,000 b/d) fell most significantly, while gas oil exports grew by about 75,000 b/d. Turkey's oil product imports reached a record high, exceeding 500,000 b/d (+60,000 b/d in June), India increased purchases by 75,000 b/d to 160,000 b/d, and China decreased by 140,000 b/d to the lowest level since mid-2022 as domestic refining volumes increased.
Russian oil price ceiling
The IEA also notes that in June, Russian oil prices recovered and in early July exceeded the price ceiling set by the G7 countries (companies of these countries cannot transport Russian oil if it is sold at a price higher than the established price cap, which is now $60 per barrel). Thus, the weighted average FOB price in Russian ports rose by $0.7 per barrel to $55.62 per barrel, while Urals price discounts to the Brent benchmark narrowed by $3 per barrel both in the Baltic and Black Sea ports. Lighter grades of oil showed less growth, and the discount for ESPO crude narrowed by $0.8 per barrel.
Since July 7, the weighted average price of Russian oil has exceeded the price cap of $60 per barrel due to the narrowing of discounts to Brent and the recovery of Brent itself, reaching $61 per barrel on July 9 and 10, writes the IEA.
The decline in Russian oil exports in June by more than 450,000 b/d, dominated by medium-sulphur Urals oil from the Baltic ports (-300,000 b/d), helped support prices contrary to the general market trend. After a decline in May, Russian refining volumes began to pick up sharply in June, which should continue into July, reducing some of the surplus oil available for export.
Tensions in the sour oil markets east of the Suez Canal, which have narrowed Brent's discounts to Dubai, have also supported Urals prices as most such cargo moves east, experts say.
This article originally appeared in Russian at interfax.ru