Idle Russian Crude Oil Refining Capacity Surges

The primary oil refining capacity that will be offline in Russia is set to soar by 44% in September compared to August amid seasonal maintenance, according to Reuters estimates based on data from industry sources.

As much as 4.635 million metric tons of Russia’s refining capacity is expected to be offline this month, industry sources have told Reuters.

Russia’s offline capacity was 3.228 million tons in August, an increase of 4.2% from the planned level.

More refineries are expected to return to operations in October when many facilities will have completed the maintenance works.

Higher offline refining capacity in Russia would usually free up more crude for exports. Moscow, however, has vowed to reduce exports by 300,000 barrels per day (bpd) in September, down from a pledge to cut 500,000 bpd in crude oil exports in August.

“As part of the efforts to ensure a balanced market, Russia will voluntarily reduce its oil supply in August by 500,000 barrels per day by cutting its exports to global markets by that quantity,” Russia’s Deputy Prime Minister Alexander Novak said in early July in a brief statement, which followed a Saudi Arabia announcement that the Kingdom would extend its unilateral 1 million bpd production cut into August.

In August, the Saudis extended the cut into September, and Russia promised a 300,000 bpd cut to its exports for this month.

Earlier this week, the two leaders of the OPEC+ alliance announced extensions in their respective ongoing production and export cuts through the end of 2023.

Saudi Arabia’s cut until December reinforces “the precautionary efforts made by OPEC Plus countries with the aim of supporting the stability and balance of oil markets,” the Kingdom says.  

Russia also extended its 300,000 bpd export cut through the end of the year, with the option to review every month and potentially deepen the cuts or increase supply, according to market conditions.

By Charles Kennedy for Oilprice.com

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