Russian Crude Oil Flows Rebound Ahead of Key OPEC+ Meeting

• Russian crude oil shipments surged by 370,000 barrels per day in the week to November 26, defying disruptions caused by storms in the Black Sea.
• The rebound comes ahead of a crucial OPEC+ meeting, where discussions about oil output quotas will take center stage.
• Analysts predict that Saudi Arabia may extend its voluntary cut of 1 million barrels per day into the next year, providing the market with some much-needed support.

Despite storms in the Black Sea disrupting loadings, weekly crude oil shipments out of Russia rebounded in the week to November 26, rising by around 370,000 barrels per day (bpd) from the previous week, just before a crucial OPEC+ meeting this week, tanker-tracking data monitored by Bloomberg showed on Tuesday.

In the week to November 26, observed shipments of crude oil from Russian ports averaged 3.24 million bpd, up by 370,000 bpd compared to the flows in the week to November 19, according to the data reported by Bloomberg’s Julian Lee.  

Still, the four-week average crude shipments from Russia were down for a third consecutive week. In the week to November 26, the four-week average crude oil exports from Russian ports was 3.16 million bpd, a decline of around 100,000 bpd compared to the four-week average flows to November 19, per Bloomberg’s calculations.

The rebound in Russia’s weekly crude oil shipments comes days before OPEC+ is set to hold its meeting on Thursday, after delaying it by a few days over disagreements about quotas.

At the end of last week, reports emerged that the OPEC+ group had made progress in talks with its African producers over their oil output quotas next year. OPEC’s African members Angola and Nigeria have reportedly asked to have a higher production ceiling next year, after taking a cut in their quotas at the June 2023 meeting of OPEC+ as they had consistently failed to pump to their quotas.

“Expectations are that Saudi Arabia will at least roll over its additional voluntary cut of 1MMbbls/d into next year. Clearly, if we do not see this, it would put further downward pressure on the market, given the surplus over 1Q24,” ING strategists Warren Patterson and Ewa Manthey wrote in a note this weekend.

“We believe that the Saudis will roll over this cut and there is a growing possibility that we see a deeper cut from the broader group. In doing this, the group would provide good support to the market going into 2024.”   

By Charles Kennedy for Oilprice.com

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