Jan. 19 (UPI) — Despite Western sanctions meant to limit what the Kremlin can put into its war chest, Russia’s deputy prime minister said Thursday that export volumes are so far on par with December levels.
A moratorium is in place in the European Union on imports of waterborne crude oil from Russia, though landlocked countries such as the Czech Republic can still draw on pipeline deliveries.
Meanwhile, a $60 price cap on Russian oil provides further disincentives given that most oil price benchmarks are in the $80 per barrel range, meaning Russia needs to sell its crude at a discount.
Nevertheless, Alexander Novak, the Russian deputy prime minister, said that export volumes, as well as production, remained more or less steady compared with month-ago levels.
“As far as production and export are concerned, we are roughly at the level of December,” he was quoted by Russian news agency TASS as saying.
Clearly, there are two more weeks before the end of the month and data could change, but Novak said from the sidelines of a bilateral business forum in Turkmenistan that there’s been no real change in output yet.
“We talked about how there is a risk for us of a decline in production, but a decline in our production hasn’t been observed yet,” he said, according to Interfax. “Our companies are operating, maintaining production and export capabilities as much as possible.”
Novak’s claim on exports may be tainted with a bit of hyperbole as the economists at the Organization of the Petroleum Exporting Countries estimate that European imports of Russian crude oil were down 1 million barrels per day year-over-year from November.
But production trends seem to be holding up, with OPEC putting Russian crude oil production at 11.3 million bpd in the first quarter of 2022 and 10.9 million bpd by the fourth quarter.
A report from Norwegian consultant Rystad Energy found Russia’s crude oil data may be supported by its renewed focus on Asian markets. Shipments of oil from western Russian ports recently hit a 10-week high at 2.3 million bpd.
While the broader oil market is focused on resurgent demand in China, much of the Russian crude oil seems to be making its way to India, where Rystad saw imports increase from 950,000 bpd in November to 1.2 million bpd last month.
Lingering supply-side challenges nonetheless prompted Novak to say it would be difficult for the global energy sector to get by without Russian crude oil, though Rystad analysts said “it may be too early to draw any definitive conclusion.”