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Exports of Russia’s flagship crude grade from its ports on the Baltic Sea are set to drop in February to the lowest level in five months, at a time when Russia is also thought to be struggling to raise its oil production as much as its OPEC+ quota allows.
Russia is expected to send from its Baltic ports next month 1.31 million barrels per day (bpd) of its flagship Urals grade popular with European refiners, according to loading data compiled by Bloomberg.
This would be the lowest volume of Urals shipments from Russia’s Baltic Sea ports since September 2021, Bloomberg’s estimates show.
The lower planned exports of Urals by sea could be the result of higher refinery runs in Russia and possible higher pipeline shipments of crude to Europe via the Druzhba oil pipeline, analysts have told Bloomberg.
Prices of the Urals grade have strengthened in recent months in northwestern Europe amid good refinery margins, JBC Energy analysts told Bloomberg.
While Russian Urals exports are expected to drop next month, Russia has seen setbacks recently in its attempt to pump to its OPEC+ quota.
Russia will likely continue to lag in the coming months, analysts told Bloomberg last week. Russia may be able to raise its output by 60,000 bpd each month in the first half of 2022—just over half of the monthly production growth of 100,000 bpd it is entitled to, according to a Bloomberg survey of analysts.
Russian supply will level off in the next two months, Francisco Blanch, head of global commodities at Bank of America, told Bloomberg earlier this month, saying that triple-digit oil “is in the works” for the second quarter this year.
Demand is recovering meaningfully, while OPEC+ supply will start leveling off within the next two months, Blanch said, noting that it will be only Saudi Arabia and the UAE that can produce incremental barrels to add to the market.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com