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Russia’s Deputy Prime Minister Alexander Novak announced the country’s plans to sell more than 80% of its crude oil exports to “friendly” countries this year.
These “friendly” countries include countries such as China and India, which haven’t participated in product bans, sanctions against Russia, and oil and oil product price capping—as well as Sri Lanka, which is in the throes of an economic crisis. While India has been criticized for its Russian crude purchases, it has maintained that it must make good economic decisions by purchasing the cheapest crude oil possible. After India refines the crude into fuel, it is often exported to the United States and Europe.
Novak also said that it is these “friendly” countries that will also receive two-thirds of its refined oil products, adding that the country was also on the hunt for new markets.
In addition to its war in Ukraine, Russia has undertaken an energy war against the West—mainly European Union member countries—which has resulted in Russia offering its crude oil at steep discounts to the Brent crude benchmark. It also has resulted in Russia’s budget swinging into a $24.7 billion deficit last month, with state revenues from oil and gas falling by nearly 50% as it was forced to slash the price of Urals. Urals has been trading somewhere near $30 per barrel below Brent.
Novak warned last week that there was a risk of lower oil production this year on the back of the EU’s import bans and price caps on Russian crude oil and its oil products. Shortly after this statement, the country announced it would cut its crude oil production by 500,000 barrels per day.
But Novak said that Russian crude oil production held fast at somewhere between 9.8 million bpd and 9.9 million bpd last month.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.