Russian exporters win as Opec+ cuts oil production | 2019-04-23 | daily-sun.com

Russian exporters win as Opec+ cuts oil production

23 April, 2019 12:00 AM printer

London: An alliance of countries that includes Russia is cutting oil production to end a global glut. One of the big winners: the nation’s own crude exporters.

The supply cuts from the so-called Opec+ nations, coupled with US sanctions on Venezuela and Iran, have reduced the amount of medium- and heavy-grade sour crude on the market. While Russia is part of the output cuts effort, exports of its medium-sour Urals crude — the country’s biggest export grade — are set to soar this month to an almost two-year high, report agencies.

“The apparent lack of other alternative medium, sour grades is forcing Mediterranean and Northwest European buyers to rely increasingly on Urals,” consultants JBC Energy GmbH said in a report.

So even as Opec+ starves the global market of heavier grades, Russia’s exports are surging. Shipments of Urals from the Baltic ports of Primorsk and Ust-Luga and Novorossiysk on the Black Sea are set to rise to 2.06 million barrels a day combined, according to Bloomberg calculations from loading programs. Russia’s overall crude exports are set to rise to 5.7 million barrels a day in April, ESAI Energy LLC said in a report last week, noting that much of that will go to Asian countries.

Last month, Lukoil Senior Vice President Vadim Vorobyov said global demand for high- and mid-sulphur grades such as Urals should increase because of the Opec+ supply cuts and US sanctions on Venezuela and Iran. He also noted that Urals’ value versus Brent crude could rise.

In Northwest Europe, the grade traded at a 50 cent premium to benchmark Dated Brent earlier this month, its firmest since reaching a five-year high in January, according to traders and brokers monitoring the Platts window. In the Mediterranean, potential buyers sought the grade at a 65 cent premium to Dated Brent — the strongest bid in the Platts window since July 2013 — though there were no sellers.


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