Russia's Urals oil exports to fall in July
Russia may further cut overseas supplies of its Urals oil next month due to rising demand from domestic refineries as coronavirus-related restrictions ease, sources familiar with the data and oil producers’ plans said.
The wrapping up of the refineries’ seasonal maintenance is also expected to increase the appetite for the crude from processing plants.
Russia agreed to reduce its oil production in May through to July by almost 2.5 million barrels per day of as a part of a deal with other oil producers, a group widely known as OPEC+, to combat the economic fallout caused by the coronavirus.
Moscow lifted its coronavirus lockdown this week.
“Demand for gasoline is ramping up fast, we have to increase runs or there will be nothing to supply to our petrol stations,” a source with a major Russian oil company told Reuters.
Exports of Russia’s flagship Urals oil bend in June have been set to decline to the lowest in months, to just 4.4 million tonnes from the Baltic ports and 1.2 million tonnes from the Black Sea’s Novorossiisk.
Traders familiar with Russian oil companies’ export plans expect oil loadings from the Baltic Sea ports to decline further next month to roughly 3 million tonnes.
Low supplies of Urals oil has driven the premium for the grade to dated Brent to historic highs in early June - plus $1.95 and $1.80 per barrel due to a lack of alternatives in Europe.
“Urals alternatives are either absent or very expensive,” a trader in northwest Europe market said.
IDLE CAPACITY TO DECLINE
Russia’s primary offline refining capacity is expected to decrease to 1.6 million tonnes from 3 million tonnes in June, according to Energy Ministry data and Reuters calculations.
It means oil companies will have roughly 1.4 million tonnes less oil for export, traders said. An increase in gasoline demand in June has been above expectations so far, which may lead to even more supplies going to domestic refineries, they added.
Reporting by Gleb Gorodyankin and Olga Yagova; editing by Vladimir Soldatkin and David Evans
Comments