MOSCOW: Russian oil exports from its main western Sea ports will fall to multi-month lows as the Kremlin oil producer Rosneft cuts supplies to its customers, three traders said on Tuesday.
The reduction runs counter to an agreement early this month by the Organization of the Petroleum Exporting Countries and allies (OPEC+) that allows Russia to increase output from February.
A possible explanation, two industry sources told Reuters on condition of anonymity, is that Russia produced more than its OPEC+ quota last year and OPEC’s de facto leader Saudi Arabia has said all members must compensate for over-production.
Russian media said the move might also be linked to soaring gasoline prices at home, an important political factor for President Vladimir Putin, who is facing increased opposition.
Three oil market players, however, said internal Russian crude and products stocks were at a good level and it would not be economic to increase refinery throughput.
Russia plans to export from its western ports 4.45 million tonnes in February down by 0.18 million tonnes from the preliminary programme issued on Monday as Rosneft cancelled two cargoes, three traders said on Tuesday.
Rosneft cancelled 100,000 tonnes of Urals loading from Baltic Ust-Luga on Feb. 25-26 as well as a Urals cargo of 80,000 tonnes planned for loading from Novorossiisk on Feb. 16-17, the traders said. Russia’s state giant Rosneft plans the deepest cuts to its exports for February, leaving its customers with 500,000 tonnes of Urals for loading from Baltic ports compared to 1.5 million tonnes in January, the schedule shows.
Rosneft did not respond when Reuters asked why the exports were lower.
The cuts mean Russia’s oil exports from its western outlets are scheduled to be 22% down on a daily basis compared with the January schedule, Reuters calculations showed.
Market participants voiced surprise at the cuts to exports, which are closely correlated to Russian output.
“There is no logic. Russia was widely expected to increase exports as OPEC+ cuts ease as previously it used every chance to increase loadings,” a source active in the European oil market said.