Russia's western ports expect 13 percent drop in crude oil exports in November

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Recently, according to two trade sources, with the end of the Russian refinery maintenance season, the country's crude oil exports from its three main western ports-Primorsky Krai, Ustiluga and Novorossiysk in November It is expected to decline significantly. Specifically, exports will be 13% lower than in October to 1.95 million barrels per day (MMbpd), or about 8 million tonnes.

 

The change has drawn widespread attention from market participants, especially those who closely follow the dynamics of exports from Russia's western ports, such as members of the Organization of the Petroleum Exporting Countries (OPEC). The export volume of these ports fluctuates greatly and is deeply affected by the intake of raw materials from domestic refineries.

 

Looking back this year, Russia has maintained a high level of oil exports, but at the same time it is also facing the problem of oil overproduction. This excess production has exceeded the amount stipulated in the OPEC + agreement. To this end, Russia has promised to make additional production cuts from the end of 2024 to bridge the gap.

 

It is worth noting that although Russia cut crude oil production by 28,000 barrels per day to about 9 MMbpd in September, oil loadings in the western port will still fall to 1.95 MMbpd in November from 2.25 MMbpd in October.

 

With the completion of major seasonal maintenance between September and October, Russian refineries are expected to increase operating rates next month. However, while offline refining capacity fell sharply from 4.4 MMt in October to 1.8 MMt in November, implying theoretically higher refinery run rates and less crude oil exported, this may not be the case in practice.

 

According to sources, due to poor profit margins, some Russian refineries are in no hurry to increase operating rates after maintenance. A trader involved in the sale of Russian oil products said: "The profitability of export sales is still very low due to low profit margins (of oil products), discounts on Russian fuel and transportation costs."

 

This trend is not limited to Russia, where margins are generally low for refineries worldwide. Refiners in Asia, Europe and the United States are all facing declining profitability to multi-year lows, a sign that an industry that had enjoyed soaring returns in the wake of the epidemic is in the doldrums. At the same time, it also highlights the severity of the current slowdown in global demand.

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