Russian oil has broken through the ceiling – Kommersant
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The volume of deliveries of Russian oil and oil products abroad continued to grow in April – in total it amounted to 8.3 million barrels per day (b / d), according to data from the International Energy Agency (IEA). The bulk of exports go to China and India, but new buyers are also emerging. This supports the reduction of the discount – in April, the total average price of Russian oil, taking into account the expensive ESPO grade, rose by $10 per barrel, exceeding the established ceiling of $60 per barrel. However, the main part of deliveries falling on the Urals grade is still sold below this threshold.
Russian export of oil and oil products in April was a record since the beginning of the Russian military operation in Ukraine – deliveries amounted to 8.3 million b/d, having increased by 50 thousand b/d over the month, data show May IEA report. At the same time, oil supplies increased by 250,000 bpd to 5.2 million bpd, while oil product exports, on the contrary, decreased by 200,000 bpd to 3 million bpd. The export revenue of Russian oil companies, according to the agency, increased by $1.7 billion to $15 billion (in April last year it was higher by $5.5 billion). Including $9.6 billion (plus $1.4 billion) was received from oil exports in April.
The main directions of deliveries remained China and India — 2.3 million and 2.2 million b/d, respectively. These two countries account for 80% of Russian oil supplies.
600,000 b/d each “left” to the EU and Turkey (this is the main direction for the export of petroleum products), another 1.9 million b/d went to other countries. Tunisia and Egypt became new buyers, deliveries also went to Singapore, Brazil and Malaysia, listed in the IEA. Finally, 0.7 million b/d went to an unknown destination – the volume of such deliveries increased sharply compared to March, when they amounted to 200 thousand b/d. It should be noted that Russian oil is partially replacing African oil in Asian markets – the share of West African oil in India’s imports has decreased from 15% to 5%, China – from 35% to 25%.
Against the backdrop of high export volumes, the IEA also raised its forecast for Russian oil production this year by 180,000 b/d to 10.7 million b/d (350,000 b/d less than a year ago).
In April, production, according to the IEA, amounted to 9.6 million bpd. The previously announced production cut of 500,000 b/d should come from 9.8 million b/d, which means that it should fall by another 300,000 b/d in May, the agency said.
The IEA notes an increase in prices for Russian grades of oil and a reduction in the discount to Brent – the average delivery cost FOB (Free On Board; does not include shipping and insurance costs) in April increased by $10 per barrel, to $60.47 per barrel (in March – $50.65). This price is a weighted average for Urals in the ports of Primorsk and Novorossiysk and for ESPO oil delivered via the East Siberia-Pacific Ocean (ESPO) oil pipeline. The cost of ESPO significantly exceeds the ceiling introduced by the G7 countries ($60 per barrel)—in April, the price for this grade increased by $5.64 per barrel, to $73 per barrel (note that due to the fact that the G7 ceiling was exceeded, the discusses tightening controls on ships serving Russian supplies). ESPO shipments increased by about 75,000 b/d to 861,000 b/d, with a quarter of those shipments going to India and the rest to China, where oil refining continues to grow, according to the IEA. Prices for Urals, the main Russian grade, remained below the ceiling, but also rose by almost $11 a barrel, above the average of $55 in April. The cost of oil products remains well below the ceiling of $45 and $100 per barrel (depending on their category).
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