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Russia is preparing to significantly reduce the oil supply to the market from its Baltic and Black Sea ports—to the lowest in two decades in May when the OPEC+ production cut deal begins, Reuters reported on Friday, quoting a preliminary loading schedule it has seen.
Russian seaborne oil exports from the port of Novorossiysk on the Black Sea and the Baltic ports Primorsk and Ust-Luga are set to drop next month by 43 percent on a daily basis compared to the oil export levels in April, according to Reuters estimates.
As part of the new OPEC+ deal, Russia has pledged to cut its production in May and June to 8.5 million bpd—or by 2.5 million bpd from a baseline level of 11 million bpd. These would be the largest cuts that Russia will ever attempt to make as part of the OPEC+ group. In the previous deals, Russia hasn’t fully complied with its quotas, attributing non-compliance to weather, complex geology, or the fact that condensate was considered (until December) as part of its oil production.
While Russia is likely to struggle to hit that reduction target, the slashed exports from the European seaports suggest that Moscow will be limiting the oil supply to international markets at a time when global inventories of crude and gasoline threaten to overflow amid the massive demand collapse in the pandemic.
Exports of Russia’s key export blend Urals are expected to slump to the lowest level since at least the early 2000s, according to data from Refinitiv Eikon, cited by Reuters.
Production of crude oil and condensate in Russia has been unchanged so far in April compared to March. According to data from the Russian energy ministry, seen by Bloomberg, Russia’s crude and condensate production averaged 11.289 million bpd between April 1 and 23—a week before Russia is set to reduce its production under the new agreement. In March, Russia produced 11.29 million bpd of crude oil and condensate.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.