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Russia's production of crude oil did not exceed 11.25 million
b/d in first half of October, according to official data released
earlier this month. Production is estimated to have fallen 20,000
b/d since September, which is still marginally above its quota
level of 11.91 million b/d, agreed during the last OPEC+
meeting.
However, this must be pleasing Saudi Arabia and other members of
the cartel, as Moscow seems determined to meet its quota, as Energy
Minister Alexander Novak recently commented. As the leading
producer among the "+" countries, ten producers participating in
the production cut deal together with OPEC, Russia has agreed to
cut 230,000 b/d from its production in October 2018, which stood at
11.421 million b/d.
Russia explained that its production in September was slightly
higher than it planned to be, primarily due to the production of
gas condensate having increased ahead of winter. The OPEC+ deal
hasn't proved enough to push oil prices higher, as earlier
anticipated, but meanwhile there's no doubt that any increase could
cause prices to fall under more pressure.
The scenario of further deepening the cuts hasn't been formally
discussed so far, but OPEC Secretary General Mohammad Barkindo
noted last week that "all options are on the table", with nothing
expected before OPEC's next official meeting in December.
In terms of seaborne exports, shipments from the Baltic Sea have
been increasing so far in October, according to data by IHS Markit Commodities at Sea,
including voyages through the Arctic heading to China and other Far
Eastern countries. US sanctions on COSCO tankers and the
dramatically increased cost of transport made some Russian crude
grades much more popular in Asia. Volumes from the Baltic have been
increasing by more than 10% month-on-month, while flows from the
Russian Far East are up by more than 6% since September, as demand
for grades such as Sokol have been strengthening. European
importers continue absorbing most Russian seaborne exports, while
the Far East's market share remains quite strong. Flows to the US
and other Asian countries have been increasing as well.
Posted 24 October 2019 by Fotios Katsoulas, Liquid Bulk Principal Analyst, Maritime & Trade, IHS Markit
