Russia’s oil export revenues in September reached their highest since July 2022 – $18.8 billion

Russia’s income from oil exports, thanks to rising oil prices and the restoration of supply volumes, in September reached its highest level since July 2022 – $18.8 billion, according to estimates from the International Energy Agency (IEA). The reduction in oil production by Russia and other countries of the OPEC+ agreement continues to put pressure on world prices. In the near future, the situation may become more complicated due to the development of the military conflict in the Middle East: so far, the Hamas attack on Israel has not significantly affected oil flows, but the market remains “in tension,” IEA experts note.

Russia’s oil export revenues in September increased by $1.8 billion and reached $18.8 billion – this is the maximum since July 2022, according to a new IEA review. The total volume of exports of oil and petroleum products increased by 460 thousand bpd, to 7.6 million bpd. Separately, oil – by 250 thousand b/d, up to 4.9 million b/d. The weighted average price of Russian oil in September, according to the IEA, increased by $8, to $81.8 per barrel (the Ministry of Finance, using estimates from the Argus agency, previously reported the September price of $83.1 per barrel for Urals). This is noticeably higher than the price ceiling of $60 per barrel, which obviously does not work in practice. The discount of Urals to Brent in September dropped to its lowest level since March 2022, $12.2 per barrel (according to the Ministry of Finance – to $10.9).

The IEA calculated that in September, oil supplies from Russia to China increased by 270 thousand b/d, and to Turkey by 80 thousand b/d. At the same time, the direction of export of about 190 thousand b/d of oil is still unknown, the agency notes. Oil production in the Russian Federation, according to IEA estimates, increased last month by only 10 thousand b/d, to 9.48 million b/d.

Global production increased by 270 thousand b/d, to 101.6 million b/d – mainly due to Nigeria and Kazakhstan. OPEC+ countries produced 36.38 million bpd of oil last month against the target of 36.92 million bpd.

The introduction of voluntary restrictions on oil production by the countries of the agreement, as previously noted by the IEA, is already leading to a shortage of supply on the world market (see Kommersant on September 14). Serious pressure on the market is also exerted by Saudi Arabia’s decision to extend its voluntary production cuts until the end of the year. However, the expected decline in production from Saudi Arabia and Russia will be partially offset by increased supplies from Iran. The IEA predicts that if countries abandon the agreement to limit production early next year, supply and demand will gradually return to balance – however, OPEC+ members have not yet announced such plans.

In its new report, the IEA slightly increased its estimate of global oil demand growth in 2023: to 2.254 million bpd from 2.243 million bpd expected in September. Demand is expected to average 101.85 million bpd this year. The most significant contribution to its growth will be made by India, Brazil and China, with China, according to agency forecasts, accounting for 77% of the increase. The rapid growth in demand in these countries compensates for its local decline in individual countries, including the United States, where, according to preliminary data from September, gasoline consumption fell to a 20-year minimum, as well as in developing countries (for example, Pakistan and Egypt), in which demand decreases due to the weakening of national currencies against the dollar.

In 2024, the growth in oil demand will be 880 thousand barrels per day (b/d), the IEA believes. In September, the figure was forecast at 994 thousand b/d – the decrease in estimate is explained by a combination of two factors: a more rational use of energy resources (we are talking about the desire of both developed and developing countries to achieve climate goals) and a contraction in economic activity. According to agency forecasts, oil demand next year could reach 102.73 million bpd (September estimate – 102.81 million bpd).

The report notes that although the Hamas attack on Israel has not yet had a direct impact on oil flows, the market remains “on edge” in anticipation of developments. The Middle East is a region that accounts for a third of the world’s seaborne oil trade, so immediately after the war began, traders began to set risk premiums on the price of oil (about $3-4 per barrel). Now, the IEA notes, prices have stabilized.

Kristina Borovikova