Exiliados, los venezolanos también llegan al país con espíritu emprendedor
abril 19, 2019
El reloj de Venezuela para la recuperación democrática continúa su marcha
abril 19, 2019
Show all

Opec+ cutting oil production and Russia’s crude exporters win

  • Gulf Times
  • 19 Apr 2019

An alliance of countries that includes Russia is cutting oil production to end a global glut. One of the big winners: the nation’s own crude exporters.

The supply cuts from the so-called Opec+ nations, coupled with US sanctions on Venezuela and Iran, have reduced the amount of medium- and heavy-grade sour crude on the market. While Russia is part of the output cuts effort, exports of its medium-sour Urals crude – the country’s biggest export grade – are set to soar this month to an almost two-year high.

“The apparent lack of other alternative medium, sour grades is forcing Mediterranean and Northwest European buyers to rely increasingly on Urals,” consultants JBC Energy GmbH said in a report.

So even as Opec+ starves the global market of heavier grades, Russia’s exports are surging. Shipments of Urals from the Baltic ports of Primorsk and Ust-Luga and Novorossiysk on the Black Sea are set to rise to 2.06mn barrels a day combined, according to Bloomberg calculations from loading programmes. Russia’s overall crude exports are set to rise to 5.7mn barrels a day in April, ESAI Energy LLC said in a report last week, noting that much of that will go to Asian countries.

Last month, Lukoil Senior Vice President Vadim Vorobyov said global demand for high- and mid-sulphur grades such as Urals should increase because of the Opec+ supply cuts and US sanctions on Venezuela and Iran. He also noted that Urals’ value versus Brent crude could rise.

In Northwest Europe, the grade traded at a 50 cent premium to benchmark Dated Brent earlier this month, its firmest since reaching a five-year high in January, according to traders and brokers monitoring the Platts window. In the Mediterranean, potential buyers sought the grade at a 65 cent premium to Dated Brent – the strongest bid in the Platts window since July 2013 – though there were no sellers.

“The Opec+ curbs have contributed to the rearrangement of Urals flows and have had a significant impact on the Urals market,” JBC analyst David Reid said. The curbs are only part of the picture, he said. In addition, higher refinery maintenance in the country and increased shipments to the US are playing a part.

Russia’s refiners had about 746,000 barrels a day of primary capacity offline earlier this month, the highest weekly volume this year, according to Bloomberg calculations from Energy Ministry data. Monthly maintenance will probably peak in May at its highest since October 2017. Still, Russian oil output slipped to 11.3mn barrels a day in March, a reduction of about 150,000 daily barrels from the end of last year, the latest government figures show. And change is coming to the oil market. While the Opec+ cuts are set to remain in place at least through June, it’s not certain whether they’ll be extended. Later this year the effects of the International Maritime Organization’s rule to cap the sulphur content of ship fuel from 2020 will start to be felt.

Please follow and like us:

Comments are closed.