Russian Oil Production Has Already Begun To Decline

Crude oil and condensate production in Russia fell slightly in March compared to February, Reuters reported on Friday, citing sources with knowledge of the data.

In March, Russia pumped 11.01 million barrels per day (bpd) of crude and condensate, down from 11.08 million bpd it had produced in February, according to Reuters’ sources.

Russia doesn’t differentiate between crude oil production and condensate production in its official output figures. After years of debates within the OPEC+ group, Russia has won an exemption not to consider its condensate output as part of the production cut agreement. It is thought that Russian condensate production is in the region of 800,000 bpd-900,000 bpd.

While Russian production has not slumped too much between February and March, buyers in the West continue to steer clear of Russian oil cargoes, and many analysts say it is a matter of time before at least some Russian supply comes off the market.

Russian oil exports fell last week, with average shipments of around 3.63 million bpd between March 17 and 23, down by 26.4 percent compared to the previous week, Bloomberg reported on Monday, citing industry data it had seen.

In another sign that Russia could be struggling to sell all of its cargoes, Transneft, the Russian oil pipeline operator, has informed local oil companies that it would be capping the intake of yet-to-be-sold crude because of full storage, Reuters reported on Tuesday, quoting sources with knowledge of the plan.

Over the past few weeks, Russian companies have failed to award cargoes in spot tenders several times as no one in Europe was bidding despite the hefty discount of the flagship Russian grade Urals to Dated Brent, which has widened to $30 per barrel recently.

Russia will have to shut in some of its oil production as it will be unable to sell all the volumes displaced from European markets to other regions, with Russian crude production falling and staying depressed for at least the next three years, Standard Chartered said last month.

By Tsvetana Paraskova for

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