Russia’s seaborne crude flows are holding strong, meaning a pledge by the Kremlin to cut the nation’s production sharply has yet to feed through into supplies to the international marketplace.
The nation’s shipments slid by 123,000 bbls/d to 3.11 million bbls/d in the seven days to March 24, according to tanker tracking by Bloomberg. The less-volatile four-week average dipped by a similar amount. It’s the sixth straight week they’ve held above three million a day.
Russia pledged to lower output by 500,000 bbls/d from this month through June in response to a Group of Seven price cap on the nation's crude sales. The planned cut has yet to show up in cargo data. Since the reduction was announced oil prices have fallen sharply, suggesting little trader anxiety about the threatened curtailment.
Any production drop will initially be offset by reduced demand from the nation’s refineries during a period of seasonal maintenance. Lost pipeline flows to Europe are also adding to the volumes available for export by sea.
The output reduction will be made from a baseline level of around 10 million bbls/d.
But the actual reduction may be smaller, with January and February output rates both assessed below that level by the International Energy Agency. With Brent crude currently trading near $75 a barrel and market forecasts showing a surplus in the first half of the year, Russia’s OPEC+ partners may welcome a unilateral output cut from the group’s second-largest producer.
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