in June, Russian oil exports fell to the lowest level since March 2021

Russian oil exports fell to 7.3 million b/d in June, the lowest level since March 2021, according to data from the International Energy Agency (IEA). Revenues from exports of oil and petroleum products also fell by $1.5 billion to $11.8 billion. Prices could be supported by a voluntary 1 million b/d production cut in Saudi Arabia in July, but global demand is also weakening following a decline in global business activity – the agency has already revised its forecast for oil demand growth this year, reducing it to 2.2 million bpd.

The decline in industrial activity has led to a revision in the estimate of oil demand this year – according to the forecast of the International Energy Agency (IEA), the increase will be 2.2 million b / d, to 102.1 million b / d – this estimate was reduced by 220 thousand b / d, while China should provide about 70% of this increase. In 2024, demand growth may even slow down to 1.1 million bpd. Oil supply, in turn, increased by 480,000 bpd in June to 101.8 million bpd. However, as early as July, it may drop sharply due to the entry into force of voluntary restrictions on the production of Saudi Arabia (by 1 million bpd), which will reduce the level of production in the country to 9 million bpd. In general, for the year, production may increase by an average of 1.6 million b/d to 101.5 million b/d, including in non-OPEC+ countries by 1.9 million b/d. By 2024, global supply could grow by 1.2 million b/d to a new record of 102.8 million b/d (all of the increase will come from non-OPEC+ countries).

Russian oil exports in June, according to the IEA, fell by 600,000 b/d to 7.3 million b/d, the lowest level since March 2021.

At the same time, export earnings fell by $1.5 billion to $11.8 billion, which is about half what it was a year ago (minus $9.9 billion yoy), as well as the lowest level of revenue since February 2023, and before that — from January 2021. Weighted average prices for Russian oil in early July exceeded the $60 per barrel ceiling set by the G7 countries, while the Urals discount to Brent decreased by about $3 per barrel for supplies from both the Baltic and Black Sea ports. The discount for ESPO crude oil, supplied via the East Siberia-Pacific Ocean (ESPO) oil pipeline, decreased by $0.8 per barrel. The average price of Russian oil in June was even lower than the ceiling – $55.62 per barrel.

Deliveries of crude oil decreased by 500,000 b/d to 4.7 million b/d, the lowest level since December last year, of petroleum products, by 100,000 b/d, to 2.6 million b/d (year-on-year). by the year – this is minus 400 thousand b/d and plus 100 thousand b/d, respectively). Deliveries fell both to China (from 2.4 million to 2.2 million b/d) and to India (from 2.3 million to 1.5 million b/d). At the same time, exports of Russian oil products to India increased by 75,000 b/d to 160,000 b/d, while deliveries to China decreased by 140,000 b/d, to the lowest level since mid-2022. The import of oil products to Turkey, on the contrary, increased to 500 thousand b/d (plus 60 thousand b/d), in general, exports to the country remained unchanged (700 thousand b/d).

Moscow has also promised a further 500,000 b/d cut in exports starting in August, but this may not affect production levels, which could support domestic consumption, the agency believes.

In June, production was 9.45 million b/d, which means that Russia has implemented the promised reduction in supplies by 500 thousand b/d compared to February (at that time production was 9.95 million b/d). Including condensates, production amounted to 10.75 million b/d, which is 645 thousand b/d less than in February 2022. On average for the year, the IEA predicts production at the level of 10.87 million b/d, which is 220 thousand b/d less than last year.

Tatyana Edovina