IEA estimates decline in Russian oil exports in June at 600,000 bpd to 7.3 mln bpd, while output remains unchanged

MOSCOW. July 13 (Interfax) - Russian exports of oil and petroleum products fell 600,000 bpd to 7.3 million bpd in June, their lowest since March 2021, the International Energy Agency (IEA) said in its Monthly Oil Market report.

Oil exports declined by 500,000 bpd to 4.7 million bpd, while exports of petroleum products fell 100,000 bpd to 2.6 million bpd. Experts attribute this to the completion of overhauls at refineries and the transition of some fields to summer maintenance.

Estimated export revenues plunged by $1.5 billion to $11.8 billion - nearly half the levels of a year ago ($9.9 billion less, while exports in volume terms fell by 300,000 bpd).

"Moscow has promised a further 500,000 bpd reduction in exports from August to stem declining prices and revenues, but may hold production steady as domestic oil demand rises seasonally," the IEA said.

Russian crude output held broadly steady in June at 9.45 million bpd as a decline in exports was offset by higher domestic refinery runs. That means Moscow has largely fulfilled its voluntary production cut relative to February.

Total output of crude oil, condensates and NGLs in June was relatively stable versus May at 10.75 million bpd. We expect average oil production of 10.87 million bpd in 2023, down 220,000 bpd year-on-year.

While June data is not yet final, known loadings eased for many destinations including China and India. Crude imports by Turkey fell 70,000 bpd over the month to 190,000 bpd. Of note, the 'Other Destinations' category (up 150,000 bpd month-on-month) includes other FSU countries, the UAE, Saudi Arabia and Cuba.

The fall in Russian product exports was dominated by fuel oil (-210,000 bpd month-on-month) and naphtha (-25,000 bpd) while gasoil exports rose by around 75,000 bpd. Turkey's product imports reached an all-time high of over 500,000 bpd (+60,000 month-on-month), India's rose 75,000 bpd to 160,000 bpd while those for China fell to 140,000 bpd, the lowest since mid-2022, as its domestic refinery activity picked up.

The IEA also said that Russian oil prices recovered in June and in early July exceeded the price cap set by G7 countries (companies of these countries cannot ship Russian oil if it is sold at a price above the established price cap, which is now $60 per barrel). Thus, the weighted average FOB price in Russian ports rose by $0.7 per barrel - to $55.62 per barrel, while discounts of Urals to Brent narrowed by $3 per barrel in both Baltic and Black Sea ports. Lighter grades showed less growth, with the ESPO discount narrowing by $0.8 per barrel.

From July 7, the weighted average price of Russian oil has exceeded the price cap of $60 per barrel due to the narrowing of discounts to Brent and the recovery of Brent itself, reaching $61 per barrel on July 9 and 10, the IEA said.

The decline in June Russian oil exports by more than 450,000 bpd, dominated by Urals medium-sulfur crude from Baltic ports (-300,000 b/d), helped support prices against the general market trend. After a downturn in May, Russian refining volumes started to increase sharply in June, which should continue into July, reducing some of the surplus oil available for export.

Tensions in high-sulfur crude markets east of the Suez Canal, which have narrowed the Brent price discount to the Dubai grade, have also supported Urals prices as most such cargoes move eastward, experts say.

A dip of over 450,000 bpd month-on-month in June seaborne Russian crude exports, dominated by medium sour Urals from Baltic ports (-300,000 bpd month-on-month) helped support prices against the overall market trend. After a trough in May, Russian refinery runs began a sharp increase in June that should extend into July, reducing some of the surplus crude available for export.

Tightening East of Suez sour crude markets that drove a narrowing of the North Sea Dated premium to Dubai also supported Urals prices as most cargoes move east, IEA experts said.