Russia may sharply increase oil exports in November

Russia may sharply increase oil exports in November amid high prices. According to forecasts by the analytical company Kpler, sea shipments of Russian oil may increase by 200 thousand barrels per day compared to October, reaching record levels since May of this year. Companies are forced to redirect oil for export due to repairs at refineries. Since the summer, Russia has been pursuing a policy of limiting oil exports (while its OPEC+ ally Saudi Arabia is cutting production), but, according to experts, only from December seaborne oil supplies will begin to decline significantly.

The Russian Federation may increase seaborne oil exports in November to 3.6–3.7 million barrels per day (b/d), the highest level since May 2023, Kpler predicts. As of October, the analytical company expects that seaborne oil supplies abroad will amount to 3.5 million b/d compared to 3.45 million b/d in September. The growth in maritime exports in October is explained by an increase in loading through the ESPO pipeline system to the port of Kozmino, while in mid-September it decreased due to repairs on the pipeline, as well as an increase in Urals supplies from the ports of the European part of the Russian Federation, which for the first time since May exceeded the level of 2 million bbl /With.

The Russian Federation began to sharply reduce sea exports in the summer, hoping that, together with agreements with Saudi Arabia to reduce production, this would boost oil prices and reduce sanctions discounts on Russian oil. Thus, the Russian Federation promised in August to reduce exports by 500 thousand b/d, and Saudi Arabia decided to limit production by 1 million b/d until the end of the year. Marine exports of Russian oil in July fell to a minimum of 3.1 million b/d, and in August amounted to about 3.2 million b/d. Since September, Russian oil companies began to restore oil exports, while the government promised to maintain its reduction in the amount of 300 thousand bpd until the end of the year relative to the original export schedules.

According to Kommersant, over the 25 days of October, Russian oil companies processed on average about 5.3 million bpd, but the completion of repairs at a number of large Russian refineries at the end of October will likely lead to an increase in oil refining in November. At the same time, the Russian Federation still maintains an embargo on the export of gasoline and on railway supplies of diesel fuel.

As a rule, the period of repairs at refineries entails an increase in oil exports, notes Victor Katona from Kpler.

Oil production in Russia has not yet shown any tendency to decline, and condensate production is beginning to grow seasonally along with gas production and has already surpassed 1 million bpd, drilling is more active than ever, and the number of operating wells is growing. At the same time, seaborne oil exports in September-October amounted to 3.4–3.5 million b/d, and in May, when the volume of repair work was comparable to the current one, exports by sea increased to 3.9 million b/d. Moreover, oil production indicators were approximately the same as now. “Taking into account the time lag between the increase in oil refining and the volume of oil stored in the Russian pipeline system, sea exports could increase to 3.7 million bpd in November,” the expert argues. After this, the winter decline in exports will begin: in fact, by November 15, all significant refineries will be out of repair, so in December-January there will already be significantly less oil for export. At the same time, Saudi Arabia’s oil exports in October rose to the highest level since June – 6.5 million bpd, which is 1 million bpd more than in August, the analyst notes. Saudi Arabia’s exports typically decline in the summer, when some of the oil is used to generate electricity.

The Russian Federation will indeed have the opportunity to increase oil exports in November, agrees Sergei Kondratyev from the Institute of Energy and Finance. Current restrictions on the export of gasoline and diesel fuel, as well as the seasonal decline in domestic demand for fuel, create the preconditions for the redirection of oil for export. It is likely that Russian oil companies will also increase production in October-November, which will lead to an increase in supplies abroad, the expert believes.

Dmitry Kozlov