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Russia's oil output in June close to February levels: Novak


June output up around 600,000 b/d on May

July oil exports to fall slightly

Output down on Ukraine invasion, sanctions

  • Author
  • Rosemary Griffin
  • Editor
  • Aastha Agnihotri
  • Commodity
  • Oil
  • Topic
  • War in Ukraine

Russia is close to restoring its oil production volumes to February levels, the Prime news agency reported June 16, citing Deputy Prime Minister Alexander Novak as saying.

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Russia's oil output fell significantly following Russia's invasion of Ukraine, which triggered extensive Western sanctions and led traditional key buyers in Europe to significantly reduce purchases of Russian oil.

"We see that we have a fairly significant increase in June compared to May, up around 600,000 b/d," Novak said on the sidelines of the St Petersburg International Economic Forum, according to the report.

Novak said that Russian oil production is currently down around 300,000 b/d from pre-invasion levels, and the maximum dip was 1-1.1 million b/d.

He added that all the prerequisites are there for further production increases in July, but exact volumes will depend on company plans, exports and supplies to the domestic market.

S&P Global Commodity Insights reckons that only half of the 1.9 million b/d of banned seaborne crude exports to Europe will be redirected to Asia. It expects Russian production shut-ins to grow from 940,000 b/d in May to 2 million b/d by December, it said in a global political risk scorecard released June 9.

Russian crude production recovered by around 150,000 b/d in May, to 9.29 million b/d, according to the latest Platts survey by S&P Global Commodity insights.

This was significantly below its quota of 10.549 million b/d under the OPEC+ production agreement. Russia's quota increases to 10.663 million b/d for June.

Local media reported June 16 that Novak -- a key architect of the agreement -- will meet with Saudi energy minister Prince Abdulaziz bin Salman on the sidelines of the forum.

Novak said that Russian oil exports are down slightly in June, and shipments to the domestic market are up, providing no concrete figures.

Russia has not publicly provided oil production and export data since April.

The destination of Russian oil has changed significantly since Russia invaded Ukraine on Feb. 24.

The IEA said that Russian oil export volumes to EU countries fell 170,000 b/d on the month in May, to 3.3 million b/d, in a report released June 15.

European reluctance to buy Russian oil has led to Russia's key crude grade Urals trading at significant discounts to Dated Brent.

Platts assessed Urals at $88.19/b on June 15, compared with Dated Brent at $128.16/b, S&P Global data showed. Prior to the invasion on Feb. 24, Urals was trading at a discount of around $10/b to Dated Brent.

Meanwhile, Russia is ramping up deliveries to Asian markets.

China and India are the biggest growth market for Russian oil. The two Asian oil importers have now grown their share of Russian shipped crude to almost 30% and 20% respectively, a combined growth of more than 1 million b/d on pre-war levels, according to Kpler shipping data.