After the EU embargoes and the maximum price imposed by the West, Russia has been able to reroute its crude oil and fuel shipments, according to Russian Energy Minister Nikolai Shulginov on Tuesday.
According to the minister, Russia hasn’t decreased the amount of crude and petroleum products it sells.
Shulginov was reported as saying, “As far as sanctions are concerned, it is necessary to retain the production and refining volumes, as well as exports, and therefore the revenues for the government budget.”
Russia’s oil and petrol production would decline in 2023 compared to 2022, the minister had earlier stated.
Shulginov stated earlier this month that Russia anticipates lower oil and petrol production in 2019 compared to 2022, in part due to the impact of the March production restrictions.
According to Shulginov, who was reported by the Russian news agency Interfax, “for 2023, we predict oil output levels to be marginally lower, in addition to the voluntary decrease in output.”
The loss of the European market and the timing of the rerouting of energy flows to the East would both result in a further reduction in petrol production volumes, the Russian energy minister added.
This week, tanker-tracking figures provided by Bloomberg revealed that despite the EU ban on imported oil from Russia taking effect and Moscow’s announcement that it would reduce its production by 500,000 bpd, Russia’s exports of crude oil by ocean have maintained above the 3 million barrels per day (bpd) mark for the past six weeks.
Russia said last week that it would extend its 500,000 bpd reduction in crude oil production to the end of this year’s June. In March, Russia initially planned to reduce that level itself from production.
The International Energy Agency (IEA) stated in its Oil Market Report for March that “it remains to be seen if there will be adequate desire for Russian oil products now that the minimum price is in effect or if its output will start to decrease under the weight of the sanctions.”
Bottom Line
Here is what we believe int:
1. According to the energy minister for Russia, all of the nation’s fuel and crude oil shipments have been rerouted away from the EU and G7 embargoes.
2. Due in part to the nation’s voluntary output decrease, Russia’s oil and gas production is anticipated to decline this year compared to 2022.
3. The Russian Energy Minister’s announcement comes after a Bloomberg report stating that Russia’s seaborne oil output remain over 3 million bpd.
