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With Iran having already expressed its opposition to OPEC for
any delay of the cartel's next meeting, another fight between
members might not be far away. Re-imposed sanctions by the US have
put Tehran under severe economic pressure with its crude oil
liftings significantly down in May. Other producers, such as
Algeria and Kazakhstan, also disagree with moving the dates that
are set to take place on 25-26 June.
The biggest topic for the upcoming meeting three weeks away is
what will Russia decide to do. The country's oil giant Rosneft
recently made it clear that it will ask for possible compensation
from the government in case the OPEC+ agreement is extended with
Russia's participation. Some Russian officials have been
questioning the logic of cutting output further since the US could
easily raise production and increase it's market share further.
Russia's crude oil output fell sharply last month, with current
levels standing around 10.88 million b/d. The recent contamination
crisis has had a huge impact on the country's production. According
to data by IHS
Markit's Commodities at Sea, seaborne trade flows haven't been
affected, with volumes still surpassing 5 million b/d. The
country's economic performance is expected to feel the pressure
this quarter, with the scenario of a recession not considered
impossible anymore.
Meanwhile, Rosneft doesn't expect any dramatic decline in
production at its joint projects with Venezuela's state oil company
PDVSA in 2019. The company is rather active elsewhere as well, with
plans to begin prospecting in Iraqi Kurdistan this year.
Russian crude oil liftings so far in 2019 (Jan-May) in
thousand b/d
Focusing on Russian seaborne trade flows, Europe is still
absorbing the most. While Asia, primarily the Far East, remains the
biggest importer of Russia's Far Eastern grades, as depicted in the
chart above.
Posted 10 June 2019 by Fotios Katsoulas, Liquid Bulk Principal Analyst, Maritime & Trade
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