Russia’s seaborne crude oil exports are trending lower so far in August compared to July, but with Russia ramping up production with the easing of the OPEC+ cuts, this summer’s trend of low volumes of exports to Europe may not last long, IHS Markit said on Tuesday.
Russia has already increased its crude oil production in early August to 9.8 million barrels per day (bpd), up from below 9.4 million bpd last month, Fotios Katsoulas, Liquid Bulk Principal Analyst, Maritime & Trade, at IHS Markit wrote.
As OPEC+ is easing the record collective cuts of 9.7 million bpd to 7.7 million bpd as of August 1, Russia plans to raise its oil production by 400,000 bpd.
Russian seaborne crude oil exports plunged by 42 percent year-on-year in July and declined by 14 percent compared to June, according to data by IHS Markit Commodities at Sea. In the first half of August, cargoes loaded from Russian ports are 10 percent lower compared to July and 34 percent lower compared to August 2019.
“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,” IHS Markit’s Katsoulas said.
While Russian shipments to Europe were at record low levels in July, crude oil cargoes from the U.S. to European importers strengthened in July, following three months of very low activity. U.S. cargoes loaded for Europe in July exceeded 1.2 million bpd for the first time since March 2020, while shipments in the first half of August remained above 1 million bpd. Refineries in north Europe are importing most of the U.S. crude oil as they prefer U.S. grades to Russia’s flagship crude export grade Urals, Katsoulas noted.
In Russia’s refined products exports, an interesting development in recent weeks is increased Russian flows to the United States, especially of fuel oil. According to IHS Markit, “trade seems to be following seasonality, as August is typically a strong month for flows of refined products from Russia to the US.”
Nevertheless, Russia has generally exported more refined product volumes to the U.S. this year than in 2019, IHS Markit’s data showed.