Russian oil exports up 12% in 2022 as demand persists: Novak
Russian oil exports grew by 12% in the first five months of 2022, Deputy Prime Minister Alexander Novak said June 17, as demand persists, despite Western sanctions reducing oil exports to Europe.
“This means that our oil and oil products are in demand today around the world,” Novak said during the St Petersburg International Economic Forum.
He added that the increase is linked to lower refining volumes and the reconfiguration of refineries in Russia.
Russian oil exports rose, despite western sanctions introduced over Russia’s invasion of Ukraine, which have severely restrict Russia’s ability to supply traditional markets.
While exports to the US and Europe have fallen, Russia is increasing supplies to Asia.
Gazprom Neft CEO Alexander Dyukov said that Russia is already shipping 50% of its oil to Asia.
“At the beginning of the year, basically, three-quarters of our oil went to Europe, now more than 50% is supplied to the Asian market,” he said, during the forum.
Sanctions against Russia include a US oil import ban and the EU gradually introducing an embargo on most oil imports. This will lead to a drop of 2.3 million b/d of Russian crude imports, and 1.2 million b/d of product imports to Europe in eight months.
Dyukov said that Europe can probably do without Russian oil, but the question is the price it will have to pay to do so.
Meanwhile, Asian buyers have increased purchases of Russian oil in recent months, taking advantage of major discounts to Russia’s key crude grade Urals as a result of the sanctions.
Platts assessed Urals at $84.31/b on June 16, compared with Dated Brent at $124.275/b, as published by S&P Global Commodity Insights. Prior to the invasion on Feb. 24, Urals was trading at a discount of around $10/b to Dated Brent.
Novak also said that Russia does not plan to introduce a ruble payment mechanism for Russian oil exports to sanctioning countries.
“No, not yet. We have one exporter in the gas industry, but we have many exporters in the oil industry. The market here is quite liberalized, so it is much more difficult to implement such a mechanism,” he said, during an interview with Russia 24 TV.
From April 1, Russian countersanctions include a stipulation that European consumers should now use a ruble payment mechanism to purchase Russian gas. Several countries have been cut off for refusal to comply with the new rules.