July 15, 2023 [Reuters]-Russian oil exports from western ports are set to fall by some 100,000-200,000 barrels per day next month from July levels, a sign Moscow is making good on its pledge for fresh supply cuts in tandem with OPEC leader Saudi Arabia, two sources said on Friday, citing export plans.
OPEC and major producers including Russia, together known as OPEC+, have been cutting supply since November to support prices. Moscow this month pledged to cut exports by 500,000 bpd in August, while Saudi Arabia extended its 1 million bpd output cuts.
As Russia did not reveal the baseline for its cut, analysts and traders had said it would be difficult to monitor. But according to trading sources and Refinitiv Eikon data, the August cuts will deepen export reductions between May and July that already total 500,000 barrels per day.
July oil loadings from western ports, such as Primorsk and Ust-Luga in the Baltic Sea and Novorossiisk in the Black Sea, are set to fall to 1.9 million bpd this month compared to 2.3 million bpd in June and 2.4 million bpd in May.
Russia exports oil and products via the Pacific and a direct pipeline to China as well as its European ports. Its export plans via eastern export routes are not yet available.
Three sources familiar with the matter told Reuters that Russia had instructed oil companies to reduce supply plans for the next month.
Its energy authorities held a meeting with the companies’ top managers earlier this week, asking them to make more efforts to guarantee lower exports in August.
A spokesperson for Russian Deputy Prime Minister Alexander Novak, who is in charge of Moscow’s relations with OPEC+, did not reply to requests for comment.
Novak said on Thursday that Russian companies themselves would decide whether to cut oil production in August, but that Russia’s task was to reduce supplies to world markets.
Russia’s total crude and products exports are estimated at up to 7 million bpd, but data has been secret since the country’s actions in Ukraine, which Moscow calls special military operation.
Prior to Russia’s announcement of plans to reduce overseas supplies, OPEC+ was only managing oil production, not exports.
Igor Sechin, a powerful head of Russia’s largest oil producer Rosneft, first hinted at the need to reduce exports as well as output last month.
Russian offline primary oil refining capacity is seen rising by 40% in August from July, making additional oil export cuts next month even tougher for many.
If Russia wants to cut oil exports in August from July, companies may postpone some planned works to autumn months to increase domestic oil consumption, or cut oil production, traders said.
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