The start of the summer driving season and favorable economics for Russian refiners have helped Russia's oil production to rebound from the lows in April and May, according to government data and analysts cited by Bloomberg.
Russia's oil production rose in June and is approaching the levels last seen in February, just before the Russian invasion of Ukraine. Most of the rebound is due to higher intake from domestic refiners, which have increased processing rates after slashing them in April, when the U.S. banned imports of all Russian energy products and buyers in the West started shunning purchases of Russian crude oil and refined petroleum products.
In the first two weeks of June, crude processing rates at Russian refineries bounced back to 5.2 million barrels per day (bpd), the highest processing levels since March, per Russia's Energy Ministry data seen by Bloomberg.
Analysts believe the processing rates could continue to rise through the summer, thanks to government support for refiners and favorable refining economics, as the price of the Russian flagship grade, Urals, is more than $30 per barrel lower than Brent.
Russia's crude and condensate production increased in June by 5% to an average of 10.7 million bpd, Russian daily Kommersant reported earlier this week, quoting sources familiar with the production numbers. In June, Russia's oil exports dropped by 3.3%, while domestic refining demand is rising seasonally, according to Kommersant's sources.
Russian oil production will continue to recover in the summer, Russia's Deputy Prime Minister Alexander Novak said on Thursday, after the OPEC+ meeting, which rubberstamped a monthly 648,000 bpd increase for August.
"We believe that we will ensure recovery in the summer period; the role of Russia in achieving a balance of supply and demand will be a key one," Novak said as quoted by the website of the Russian government.
By Charles Kennedy for Oilprice.com
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