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Buoyed by OPEC+ surprise production cuts, the price of Russia’s flagship Urals crude is threatening to reach beyond the $60 per barrel price cap set by the G7, with reports now emerging that oil loadings from western Russian ports in April are likely to reach their highest level since 2019.
Despite a 500,000 barrel-per-day output cut announced by Moscow in alleged retaliation for the G7 price cap of $60, Urals crude loadings from Russia’s western ports is set to be more than 2.4 million bpd for the month of April, Reuters reports, citing trading and shipping sources.
March loadings of Urals crude from western Russian ports were at 9.7 million tonnes, according to Reuters, while April is positioning itself to see more than 10 million tonnes.
In early February, Russia announced it would cut output by 500,000 bpd in March and then vowed to extend those cuts through the rest of the year.
The markets have yet to see the impact of those supposed cuts and analysts appear uncertain whether they have been implemented as planned since March. Moscow’s production cuts have since been lost in the paperwork of output cuts announced by OPEC+ earlier this month, taking 1.6 million bpd off the market.
Reuters speculates that season maintenance on Russian refineries this month could possibly serve as an explanation for the unexpectedly high export loadings, but a major thirst for discounted Urals crude from Asia continues to drive exports. Traders cited by Reuters expect China to import more seaborne crude from Russia in May.
"Urals demand remains solid, the prices for Urals' loadings in May and bound for India are higher compared to April", one trading source told Reuters.
According to Trading Economics, Urals crude oil futures traded around $65 per barrel (above the price cap) on April 12.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com