IHS Markit: Russia exporting less crude oil to Europe, but probably not for long

Moscow, August 19 - Neftegaz.RU. Russia is now increasing its crude oil and condensate output, but seaborne exports remained unchanged in 1st half of August.

Production has approached 9.8 million b/d in early August from less than 9.4 million b/d in July. Since OPEC+ decided to ease production cuts, Russia plans to increase its crude oil production by 400,000 b/d. Output of gas condensate, typically between 700,000 and 800,000 b/d, isn't included in this deal.

Shipments heading for Europe have been feeling the pressure, with volumes having dropped to record low levels. Data by IHS Markit Commodities at Sea suggests that July's activity declined 42% year-on-year and 14% since June.

Cargoes loaded in the 1st half of August stand 10% lower than in July and 34% below levels observed a year ago. Other suppliers have been quickly filling the gaps so far, but the increase in Russian production since early August could bring this trend to an end.

Meanwhile, crude oil flows from the US to European importers have strengthened rather quickly in July, after 3 months of very low activity. Cargoes loaded last month surpassed 1.2 million b/d for the 1st time since March 2020, while shipments in the 1st half of August remained above 1 million b/d.

North Europe has been absorbing most of these barrels, as refineries show preference to US grades than Russia's Urals. Another interesting development has been the recent increase observed in flows of refined products from Russia to the US.

However, trade seems to be following seasonality, as August is typically a strong month for flows of refined products from Russia to the US. Data by IHS Markit Commodities at Sea shows that the average clean product flow between January and July has been higher than in 2019, with cargoes shipped so far in August 2020 similarly higher versus August 2019.


Author: Fotios Katsoulas