Russia's oil output rises to 10.55 mln bpd in May, could decline to 10.37 mln bpd by end of year - IEA
MOSCOW. June 15 (Interfax) - Although oil production declined in Russia in April, the country boosted output volumes in May and remains one of the leading producers globally, the International Energy Agency (IEA) said in a report.
"The outlook for Russia remains uncertain and may continue to surprise. Specifically, after falling by 930,000 barrels per day in April, total oil output in May actually rose by 130,000 bpd to 10.55 million bpd, as exports of crude to global markets have been redistributed from traditional buyers in adherence with the latest sanctions or voluntarily declining Russian barrels in solidarity with Ukraine," the IEA said in the report.
"Although a significant portion of Russian oil production has been hit by sanctions and embargoes, the country will easily maintain its position as the world's third-largest oil producer after the United States and Saudi Arabia. Meantime, these countries are expected to show record-high output both this year and next, which would widen the gap between them and Russia. Canada and Brazil are also poised to reach their highest levels ever for two consecutive years," the agency added.
The IEA notes that contrary to expectations, Russia delivered the largest gain among OPEC+ countries in May, as oil supplies remained robust, though the 10.55 million bpd were still 850,000 bpd below the volumes prior to the situation in Ukraine. "We expect oil output to remain stable in June and then begin to decline gradually as the European Union embargo on Russian oil is gradually implemented. This should bring average annual production to 10.37 million bpd in 2022, or 500,000 fewer bpd than last year," the agency said.
"By the beginning of next year, we expect production to decline by almost 3 million bpd, bringing total oil output down to 8.7 million bpd. Since it is not clear how long the crisis will last, we forecast production at this level throughout 2023. Russia itself acknowledges that finding new markets will become increasingly difficult, and production projects could be delayed, as several domestic producers are struggling to secure supplies of equipment and financing, as Western investors, service companies and lenders plan to exit the country," according to the agency's report.
The IEA also notes that revenue from exports of Russian oil increased by $1.7 billion to around $20 billion in May on the back of higher global prices for oil and petroleum products.
Exports of Russian products decreased by 265,000 bpd in May compared to January-February 2022, as exports of oil rose by 485,000 bpd, while petroleum products declined by 750,000 bpd. The EU remained the most important destination in May. At 3.3 million bpd, shipments were nevertheless 585,000 bpd lower than the January-February average, and the region’s share dropped 6 percentage points to 43%. China has been the largest individual importer of Russian oil since 2016, with its share reaching a peak 26% for the first time in May. In recent months, India has overtaken Germany as the second-largest importer, with volumes in April and May at around 950,000 bpd. Overall, eastward exports have surged by 1 million bpd from the baseline of about 2 million bpd.