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Russia’s oil production, excluding condensate, for October came in well below its production quota for the month, at just 9.9 million bpd, Russian Deputy Prime Minister Alexander Novak said on Tuesday, Interfax reported.
Russia’s October production is 1.1 million bpd below its quota of 11 million bpd allowed under its quota assigned under the OPEC+ agreement, but mostly in line with Novak’s estimates made last month.
For November, Russia’s oil production quota will drop from 11 million bpd to 10.5 million bpd. Russia’s oil production is set for even further declines into next year, as G7 and EU sanctions go into effect.
Analysts feel, however, that the G7 and EU sanctions on Russia’s oil exports won’t have the desired effect on Russian oil flows, according to a Reuters poll released on Tuesday. This is because Russia is expected to be mostly successful in finding alternate oil buyers by sending more of its oil to the east in the Asian markets.
As much as 2 million bpd of Russian oil could be taken off the global markets, according to the survey—or as little as zero barrels.
The Reuters survey polled 42 economists and analysts, many with startlingly different viewpoints. Vitol sees Russian oil flows being disrupted by 1 million bpd this winter, while analysts at the Bank of Nova Scotia see little to no change coming from the sanctions. The head of commodity research at German bank LBBW sees between 1.5 million bpd and 2 million bpd coming off the global markets as a result of the sanctions on Russian crude oil.
Bloomberg suggested earlier in the week that Russia has mostly failed to find new markets for its crude oil that the EU is set to stop purchasing when the sanctions kick in.
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.
EU and G7 sanctions will hardly affect Russian oil exports because there are many major buyers competing for Russian crude. Moreover, the bulk of Russian oil exports will continue to head towards the Asia-Pacific region with the rest being sold by both China and India around the world particularly to the EU and the United States as refined petroleum products from bought Russian crude. Furthermore, Russia owns a huge oil tanker fleet which in addition to Chinese, Indian, Turkish and Iranian fleets far exceed its needs.
Even if there was a small reduction in Russian oil and petroleum products exports, Russia will still gain more income from rising crude and products prices with Brent crude expected to soar higher than $100 before the end of the year.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert