Russia’s Oil Industry Is Suffering As The West Shuns Its Crude
Russia’s oil industry—a vital source of budget revenues—is already showing signs of slowdown as Western buyers shun Russian oil while Moscow struggles to replace lost sales in the West with sales in emerging Asian markets.
In the first ten days of April, Russia’s crude oil and condensate production slumped to an average of 10.365 million bpd, data obtained by Energy Intelligence showed this week. That’s more than 600,000 bpd below the March average crude and condensate output of 10.996 million bpd.
According to the IEA, Russian oil supply and exports continue to fall, with April losses expected to average 1.5 million bpd as Russian refiners extend run cuts, more buyers shun barrels, and Russian storage fills up. From May onwards, nearly 3 million bpd of Russian production could be offline due to international sanctions and self-sanctioning from buyers.
Due to the sanctions on Russia, fuel oil deliveries have plunged and storage is brimming with fuel, Vagit Alekperov, the president of Russia’s second-largest oil producer Lukoil, wrote at the end of March in a letter to Deputy Prime Minister Alexander Novak obtained by Russian daily Kommersant.
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More Oil From U.S. Strategic Petroleum Reserve Heads To Europe
May 12, 2022, 1:00 PM CDT
Europe is set to receive more cargoes of U.S. crude from the Strategic Petroleum Reserve (SPR) as the European Union discusses an oil embargo on Russia and looks to reduce reliance on Russian oil, Bloomberg reported on Thursday, citing tanker-tracking data and sources with knowledge of the shipments.
In recent weeks, Europe has increased purchases of U.S. crude as it considers the details of a ban on imports of Russian crude and refined products.
In April, some 1.6 million barrels of U.S. crude from the strategic reserve made its way to Europe, Smith told Bloomberg, adding: “That’s the largest amount of SPR crude that’s been shipped to the continent based on historical monthly data.”