Russian oil flows edge lower but evidence of cuts remains scant

Russian crude oil flows to international markets have drifted lower, while remaining well above levels seen in February, the baseline month for the country’s pledged output cuts, Report informs via Bloomberg.

Four-week average seaborne shipments, which smooth out some of the volatility in weekly numbers, edged down in the period to June 18 to 3.63 million barrels a day from 3.66 million in the period to June 11.

On that basis, flows are now down by 212,000 barrels a day from the peak they reached in the period to May 21, but are still 250,000 barrels a day higher than they were in the four weeks to Feb. 26. February was the baseline month for production cuts promised by the Kremlin.

President Vladimir Putin told the St. Petersburg International Economic Forum that the nation’s oil and gas industry is in good shape. “The output in the country is growing and we are happy about it, our sales are robust,” he said, without explaining how that would align with Moscow's pledge to cut production.

Secondary sources that the OPEC+ producers’ group uses to monitor its members’ production levels raised their estimate for Russia’s February volumes, effectively lifting the country’s output target by about 120,000 barrels a day.

There is still little evidence that the pledged 500,000 barrels a day of cuts — retaliation for Western sanctions imposed after the invasion of Ukraine — have been made, at least not in full. Moscow has cited the diversion of crude previously piped to Germany and Poland through the Druzhba pipeline as an explanation for robust shipments; but that switch happened in January and February, before the output cut was due to come into effect. Flows of Russian crude through the pipeline, now limited to deliveries to Hungary, Slovakia and the Czech Republic, have been stable at about 240,000 barrels a day since February.

And while Russian refineries cut crude processing rates in the first part of May, they have raised them again to the highest levels in nine weeks as the nation’s downstream maintenance season nears its end. Rising refinery runs are helping to lift exports of refined products. Seaborne exports of fuels like diesel and naphtha are on course to edge higher this month.

On a four-week average basis, overall seaborne exports in the period to June 18 were down by 35,000 barrels a day to 3.63 million barrels a day. More volatile weekly flows also fell, decreasing by about 40,000 barrels a day to 3.53 million barrels a day.