Unique: Russia sees impression of sanctions on oil merchandise, eyes crude export increase – senior supply | Jobi Cool

  • This content material was produced in Russia, the place the regulation restricts protection of Russian army operations in Ukraine
  • Russia expects sanctions to have an effect on oil merchandise -source
  • Russia sees crude oil exports rise -source
  • EU embargo towards imports of Russian oil merchandise is predicted on February 5
  • West plans value caps on Russian oil merchandise

Jan 17 (Reuters) – Russia expects Western sanctions to have a big impression on its exports of petroleum merchandise and thus its output, however it can seemingly go away extra crude to promote, a senior Russian supply with detailed data of the outlook advised Reuters .

In what the West sees as unprecedented sanctions and President Vladimir Putin sees as an financial declaration of struggle, the US and its allies try to curb the economic system of Russia, the world’s second-largest oil exporter after Saudi Arabia.

In an try to punish Russia for the battle in Ukraine, the EU banned seaborne Russian crude imports from 5 December and can ban Russian oil merchandise from 5 February.

“The oil merchandise embargo may have a much bigger impression than the restrictions on crude oil,” mentioned the senior Russian supply, who spoke on situation of anonymity due to the sensitivity of the state of affairs.

The supply mentioned the sanctions will result in extra crude provides from Russia, which lacks storage capability for petroleum merchandise.

Crude oil is simpler to export than merchandise, which require smaller tankers and nearer markets, whereas crude oil will be shipped to distant areas in Asia and the Americas.

“We expect the embargo on refined merchandise could also be extra important than the embargo on crude oil, as exporting a given quantity of merchandise is far more logistically complicated than an equal quantity of crude oil,” mentioned Ron Smith of Moscow-based brokerage BCS.

“Our assumption has been that the 2 embargoes mixed would cut back Russian oil manufacturing and whole exports by maybe 1 million barrels per day by the tip of (first quarter) 2023.”

The senior Russian supply gave a median projection for the decline in refinery operations of 15% this yr, in step with an official forecast.

In 2022, the manufacturing of Russian oil merchandise grew by virtually 3% to 272 million tons and is ready to fall to 230 million tons this yr, in response to the official forecast.

Russia’s Vitality Ministry didn’t reply to a request for remark.


Regardless of the Western oil embargo, unseen even throughout the Chilly Battle crises, Russian oil manufacturing – concentrated in western Siberia – has up to now proven resilience with an increase in crude output in 2022.

The Group of Seven nations (G7), Australia and the 27 EU international locations additionally applied on December 5 a value cap of $60 per barrel on Russian crude, though Russian blends traded under this degree.

The G7, together with the US, Australia and the EU, is designing the same value cap mechanism for Russia’s refined fuels corresponding to diesel, kerosene and gas oil, from 5 February.

Putin has inspired Russian oil producers to divert provides away from Europe to different markets, corresponding to Asia and Latin America.

His oil level man, Deputy Prime Minister Alexander Novak, mentioned final week that Russian oil producers had no downside securing export offers regardless of the sanctions and value caps.

China and India have each elevated their purchases.

Novak mentioned the primary downside for Russian oil was a steep low cost to worldwide benchmarks in addition to rising freight prices.

The Russian supply mentioned Russia hoped to recuperate exports of oil merchandise from the second half of the yr by establishing new logistics chains.

In line with official forecasts, Russian oil manufacturing is ready to fall to 490 million tonnes (9.8 million bpd) in 2023 from 535 million tonnes in 2022.

Its exports of petroleum merchandise averaged about 1.2 million barrels per day (bpd) in 2022, in response to the Worldwide Vitality Company.

Vedomosti newspaper reported on January 11, citing two sources conversant in the ministry’s knowledge, that Russia’s oil manufacturing within the interval from January 1 to 9 rose 0.1% from December to about 10.9 million bpd.

Vedomosti additionally mentioned Russian oil exports have been up 1.2% in early January, whereas refining volumes have been up 1.4%.

Sources at 4 main Russian oil refineries have mentioned there have been no adjustments but to their manufacturing plans for February.

Report from Reuters; modifying by Man Faulconbridge and Jason Neely

Our requirements: Thomson Reuters Belief Ideas.

Supply hyperlink