(+) GE Briefings – Drop in Russian crude exports

Last month Russian crude oil export to non-FSU countries dropped by approximately 400 000 b/d, this is before the announced shipment cuts in August of 500 000 b/d as a measure to help stabilize the market. The narrowing discount for Russian Urals blend has started trading above the price cap set by the G7 countries.

According to recent data Russian crude oil export to non-FSU countries, including export via the national pipeline system Transneft was down to approximately 4.3 Mbpd in July from 4.7 Mbpd in the month of June. The decline in export to non-FSU countries was somewhat offset by higher inputs to domestic refineries, which increased to 5.7 Mbpd, up 170 000 b/d from the previous month.

Russia has announced a planned cut of crude oil export to the market by 500 000 b/d in August, with expectation of prolonged cuts.

Russian seaborn export in July versus June declined of almost 500 000 b/d to 3 Mbpd which is the lowest level since the start of the year. The Baltic sea ports of Primorsk and Ust-Luga and the Black sea port of Novorossiysk had their largest m-o-m decline of approximately 500 000 b/d in July, slightly offset by Kozmino terminal who sends crude to the Asia-Pacific market, mainly China which again increased after a decrease in June. China keeps high level of import of Russian crude and in June China imported a record 2.5 Mbpd, and it`s expected that demand was strong in last month as well.

China and India remain two of the largest importer of Russian crude but hunger for cheaper barrels is facing challenges as discounts for Urals Crude keep narrowing. In July the average price of Urals stood at approximately 64.4 USD/bbl versus North Sea dated Brant at 80 USD/bbl, that means the discount for Russian Urals crude has narrowed to 15.6 USD/bbl. This is the lowest levels since the Russian invasion of Ukraine in February 2022. The Urals discount was at 21 USD/bbl a month ago, and at 40 USD/bbl in January.

With the Urals price above the G7 price cap at 60 USD/bbl complication is in bound for Russian producers. Western shippers handling Russian crude are banned from providing their services above the price cap.

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