Despite Western sanctions, Russian oil exports hit a three year high in March according to the International Energy Agency (IEA).
In its oil market report – April 2023 released on Friday, the IEA stated that Russian oil exports in March soared to the highest since April 2020.
The total oil shipments rose by 600,000 b/d to 8,100,000 b/d with products climbing 450 kb/d m-o-m to 3.1 mb/d. Russia’s estimated oil export revenues also rebounded by $1 billion to $12.7 billion but were 43% lower than a year ago.
Western nations have imposed several waves of sanctions targeting Russian oil exports, including price caps and embargoes.
In February, the EU and G7 nations introduced a price cap of $100 per barrel for diesel, jet fuel and gasoline from Russia, and a $45 per barrel limit for other oil products that trade below the crude price. Fuel exports priced above these limits are barred from insurance and shipping services offered by Western businesses.
The caps followed a previously introduced $60-per-barrel price ceiling on Russian crude oil.
Russia retaliated by refusing to sell its oil to countries that support the price cap scheme and slashing its production by 500,000 barrels per day starting in March.
RT reported that the IEA revealed that a weighted average of oil loaded from the country’s ports went above the price cap on April 5 mainly as a result of ESPO grade rising to around $74 per barrel.
Earlier this month eight members of the OPEC+ group including major oil producers including Russia, Saudi Arabia, Iraq and Kuwait, shocked the markets by announcing their own output cuts of 1.16 million bpd on top of those already introduced in November.
Investogist reported earlier in April that the announcement sent global crude prices soaring.
Highlights of the IEA report:
- World oil demand will climb by 2 mb/d in 2023 to a record 101.9 mb/d. Reflecting the widening disparity between regions, non-OECD countries, buoyed by a resurgent China, will account for 90% of growth. OECD demand, dragged down by weak industrial activity and warm weather, contracted by 390 kb/d y-o-y in 1Q23, its second consecutive quarter of decline. Jet/kerosene accounts for 57% of 2023 gains.
- Extra cuts by OPEC+ will push world oil supply down 400 kb/d by end-2023. From March-December, gains of 1 mb/d from non-OPEC+ fail to offset a 1.4 mb/d decline from the producer bloc. For the year as a whole, global oil production growth slows to 1.2 mb/d versus 4.6 mb/d in 2022. Non-OPEC+, led by the US and Brazil, drives the 2023 expansion, rising 1.9 mb/d. OPEC+ is expected to drop by 760 kb/d.
- Global refining throughput is forecast to average 82 mb/d this year, 0.1 mb/d lower than in last month’s Report due to weaker 1Q23 data. Annual gains will double to 2.1 mb/d from 1Q23 to 2Q23, as runs in the US normalise and with Chinese activity materially higher than a weak 2Q22 baseline. On average, 2023 crude runs will approach pre-covid levels but remain 0.3 mb/d below 2019 average throughputs.
- Russian oil exports in March soared to the highest since April 2020 thanks to surging product flows that returned to levels last seen before Russia invaded Ukraine. Total oil shipments rose by 0.6 mb/d to 8.1 mb/d, with products climbing 450 kb/d m-o-m to 3.1 mb/d. Estimated oil export revenues rebounded by $1 billion to $12.7 billion but were 43% lower than a year ago.
- Global inventories held largely steady in February after surging by 58 mb in the previous month. Oil on water and non-OECD stocks fell by 11.5 mb and 2.1 mb, respectively, while total OECD inventories rose by 8.8 mb. OECD commercial stocks built by 9.6 mb, narrowing the deficit against the five-year average to 7.5 mb. Preliminary data for the US, Europe and Japan show a hefty 38.9 mb decline in March.
- ICE Brent oil futures slumped to a 15-month low of $71/bbl in mid-March due to financial market instability but then recovered as banking stress waned and expectations of Federal Reserve interest rate cuts later this year increased. Surprise OPEC+ production cuts announced in early April added further momentum to the rebound. At the time of writing, Brent futures traded at $87/bbl.
Nnamdi Maduakor is a Writer, Investor and Entrepreneur