Russia's June Exports Slide Despite Stronger Output
Russia produced 10.75 million barrels per day of crude oil and gas condensate in June, according to official data seen by Energy Intelligence, a gain of 510,000 b/d, or 5.1%, compared to May.
Output of crude only is estimated at 9.76 million b/d, which is 910,000 b/d less than the monthly target under the Opec-plus agreement.
Exports slipped some 165,000 b/d to 5.05 million b/d versus May, due mainly to a decline in pipeline exports to Europe and China, according to the data, which cover Jun. 1-29.
June is the fourth full calendar month that Russian oil and petroleum products have endured embargoes, restrictions and self-sanctioning due to the country’s invasion of Ukraine in late February.
However, after a stunning fall of nearly 1 million b/d in crude and condensate production in April, Russia has recovered and boosted output by over 600,000 b/d. This means output has fallen by only 3.4% from prewar levels in February.
Importantly, production on Jun. 29 was 10.76 million b/d, up 240,000 b/d from the last day in May, which indicates the country is exiting the month — and starting July — on strong footing.
Throughput, Stocks Grow
June production was buttressed by a nearly 400,000 b/d increase in supplies to refineries to 5.4 million b/d, the data show, while balances indicate a build of nearly 200,000 b/d in inventories, partially within the system of Transneft, the nation’s pipeline operator.
Refining runs for the month are estimated at 5.26 million b/d, up 330,000 b/d, or 7%, compared to May as oil companies cranked out more products to meet rising domestic consumption and replenish stocks, particularly diesel.
Runs remain 10% below prewar levels due primarily to the US ban on heavy fuel oil — a product Russia has difficulty finding markets for — and decreased offtakes of diesel in Europe. A spring collapse in domestic demand also spurred the decline.
Question of Sustainability
Whether the May-June rebound in production is sustainable depends on many factors, particularly demand for Russian crude in Europe, India and Asia. Domestic consumption will taper off in September after summer and as refineries enter maintenance.
Europe is still importing some 1.7 million b/d of Russian crude, down from 2.2 million b/d prewar.
Interestingly, pipeline exports to Germany and Poland were flat for the month, or 288,000 b/d and 240,000 b/d, respectively, despite the two countries’ vows to wean themselves off Russian fuels.
Exports to Asia, meanwhile, slid in June.
India, which has had a voracious appetite for discounted Russian crude, slashed offtakes in June, according to shipping data. India was on track to import 610,000 b/d of Russian oil this month, versus 975,000 b/d in May, despite diversifying into Espo blend from Russia's Far East.
China remains the biggest buyer, soaking up to 2 million b/d in Russian crude, or 40% of all exports for June, according to shipping and pipeline data.
South Korean offtakes, meanwhile, were 25,000 b/d in June, flat compared to May, while Japanese imports appear to have dried up completely.