Russia’s Seaborne Oil Exports Rise To New Highs

Key Insights

• Russia’s seaborne oil exports increased by 876,000 bpd. 
• Russia has previously said that it was working on plans to limit the discounts on its oil prices, but no measures have been taken. 
• Oil traders will stay focused on the dynamics of Russia’s oil exports as they have a significant impact on global oil markets. 

Russia Boosts Exports Despite Rising Discount To Brent Oil

Today, oil traders are focused on the Bloomberg report, which indicated that Russia’s seaborne oil exports increased to the highest levels since April.

According to the report, Russia’s seaborne exports grew by 876,000 bpd to 3.8 million bpd. Most of this growth came from Russia’s Baltic ports, although shipments from Black Sea and Pacific ports have also increased.

The data offers a potential explanation to the recent increase in the difference between the prices of Russia’s Urals oil and the benchmark Brent oil. According to Neste, Urals’ discount to Brent has recently increased to $32.26. Neste’s figures are based on the last five days rolling average, so the current discount may be bigger. Urals’ discount reached the $37 level back in April, and it looks that it may test these levels soon if Russia’s exports continue to grow.

Russia’s Oil Strategy Remains One Of The Main Catalysts For Oil Markets

Back in December, Russia said that it was ready to cut production in order to avoid the price cap imposed by Western countries.

A week ago, Russia’s energy ministry said that it was working on the measures to limit the discounts to international benchmarks. Russia does not have the fleet to transport all of its export oil, so it has to rely on transportation companies that are still ready to service its oil exports despite sanctions risks.

Meanwhile, the buyers of Russian oil demand discounts. A combination of transportation problems and a limited number of potential buyers leads to big discounts for Urals oil, which is exported via Russia’s Baltic ports.

It remains to be seen whether Russia is ready to cut its oil production in the near term. If Russia’s oil exports stay at elevated levels, oil market may find themselves under more pressure.

For a look at all of today’s economic events, check out our economic calendar.