11 Aug 2022 15:49

IEA raises Russia's 2022 oil output forecast by 300,000 bpd, 2023 by 800,000 bpd, sees new export records to Asia

MOSCOW. Aug 11 (Interfax) - Russian oil production rose in July, with domestic consumption continuing to offset lower exports, the International Energy Agency said in a report.

Total crude oil, condensates and NGLs production by Russia rose 25,000 bpd to 11.09 million bpd and was down just 310,000 bpd from its level prior to the events in Ukraine.

"We expect Russian oil production to ease gradually month-on-month from August through November, along with lower anticipated refinery runs, and assume that the decline will be steeper in December when the EU embargo on Russian crude oil takes effect. That would result in annual average output in 2022 of 10.86 million bpd, steady versus 2021," the IEA said.

The IEA previously forecast Russia would produce 10.6 million bpd in 2022.

"Final June data for seaborne exports show that total crude oil shipments to China, which amounted to 2.1 million bpd, exceeded the volumes sent to the EU countries, at 1.8 million bpd, for the first time. July numbers for now are identical for the two regions, but China-bound volumes are likely to gain more as the 'unknown' destination voyages are completed," the report says.

"At the same time, Russia was the single largest source of crude oil supply to China in May and June. China accounted for 35% of Russia's crude oil exports, while Russia accounted for about 20% of China's crude oil imports. Russian exports to India increased to a new record level of 975,000 bpd in July," it said.

Russian oil exports in July are estimated 115,000 bpd lower MoM at 7.4 million bpd, just below the 2021 average of 7.5 million bpd an 8 million bpd at the start of the year. With higher domestic refinery throughputs, crude oil exports fell by 280,000 bpd to 4.8 million bpd, while products rose by 160,000 bpd to 2.6 million bpd.

Crude and oil product flows to the U.S., UK, EU, Japan and Korea have slumped by nearly 2.2 million bpd since the start of the conflict, two-thirds of which have been rerouted to other markets, the IEA said.

Russian export revenues fell by $2 billion to $19 billion in July, mainly due to lower oil prices. The IEA said Argus assessed Urals crude discounts $10/bbl narrower in July, which softened the impact of the fall in benchmark crude oil prices. The discounts were previously estimated at $30-$35/bbl.

The EU embargo on Russian crude and product imports that comes into full effect in February 2023 is expected to result in further declines, as some 1 million bpd of products and 1.3 million bpd of crude would have to find new markets.

However "some policymakers have suggested a possible softening of measures," the IEA said.

"That has led us to revise up H2 2022 Russian volumes by a further 500,000 bpd and make an upward adjustment of 800,000 bpd for 2023," it said. The agency now thinks Russia will produce 9.55 million bpd in 2023, the previous forecast being 8.74 million bpd, compared with 10.86 million bpd in 2022 and 10.87 million board of directors in 2021.