The pact between Saudi Arabia and Russia to keep oil barrels off the market could be showing signs of weakening, with Russia's oil exports now on the rise.
Russia's seaborne crude oil exports rose in the seven days to October 15, with Russia's four-week average seaborne crude exports now at a three-month high. Russia's crude exports now are at 3.51 million barrels per day, an increase of .285 million bpd from the seven days to October 8, according to tanker tracker data analyzed by Bloomberg.
Four-week average outflows from Russian ports is now 3.36 million bpd. According to calculations based on Deputy Prime Minister Alexander Novak's stated export restrictions of 300,000 bpd, which are supposed to run through the end of the year, Russia's seaborn crude exports should be capped at 3.28 million bpd.
For Russia, the additional exports mean increased revenues from export duties, the four-week average of which is now at the highest point since January.
The news of Russia's increased oil exports could be seen as a sign of weakening of the pact between Saudi Arabia and Russia, which have agreed to restrict the supply of oil. Saudi Arabia, for its part, has made good on its end of the bargain, and saw its crude oil exports fall to a 28-month low in August, according to the latest Jodi data. But on Tuesday, Saudi Arabia issued what could be seen as either a threat or as an assurance: Saudi Aramco has the ability to raise its oil production "in a couple of weeks" if it turns out to be necessary. Saudi Arabia claimed on Tuesday that the oil company's spare capacity is 3 million barrels per day.
By Julianne Geiger for Oilprice.com
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Comments
I have always maintained that Saudi Arabia’s voluntary production cut has nothing to do with the market and prices and everything to do with production difficulties. In a nutshell, the Saudis have made an illusory cut of what they can’t produce anyway.
Russia’s cut was a gesture of solidarity with Saudi Arabia. It has had no effect on the global oil market because a concomitant rise of taxes on domestic petroleum products has led to a reduction in domestic demand thus enabling Russia to maintain its level of exports at the pre-cut level.
Moreover, the pact between Russia and Saudi Arabia and by extension OPEC+ will continue as long as there are mutual benefits to both sides. This seems to be the case.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert