BAKU, Azerbaijan, March 22. Russia's exports to global markets in February 2023 decreased by more than 500,000 barrels per day (b/d) to 7.5 mb/d, Trend reports citing the latest oil market outlook from the International Energy Agency (IEA).
At the same time, while the country's production remained near the level before the war in Ukraine, supplies to the EU dropped by 760,000 b/d to just 580,000 b/d.
"Over the past year, 4.5 mb/d of Russian oil previously going to the EU, North America and OECD Asia Oceania has had to find alternative outlets. Willing buyers in Asia, namely India and, to a lesser extent, China, have snapped up discounted crude oil cargoes, but increasing volumes on the water suggest the share of Russian oil in their import mix may be getting too big for comfort. Russia accounted for around 40 and 20 percent of Indian and Chinese crude imports, respectively, in February. The two countries took in more than 70 percent of Russia’s crude exports last month," the IEA said.
Meanwhile, in the reporting period, Russian product exports to the EU and its G7 allies crashed by nearly 2 mb/d versus pre-war levels.
Russia's oil shipments to Asia increased by less than 300,000 b/d, while supplies to Africa, Türkiye and the Middle East grew by 300,000 b/d, 240,000 b/d and 175,000 b/d, respectively, and Latin America received roughly the same as before the war.
"The lack of buyers saw oil pile up on the water and product exports drop by 650,000 b/d year-on-year. It remains to be seen if there will be sufficient appetite for Russian oil products now that the price cap is in place or if its production will start to fall under the weight of sanctions," the IEA noted.
Meanwhile, Russia's oil revenues are already shrinking. In February, Russia’s estimated oil export revenues fell to $11.6 billion, which a decrease of $2.7 billion from January, when volumes were significantly higher, and nearly half pre-war levels.
"Russian fiscal receipts from oil sales were up 22 percent from January after export taxation rules were adjusted, but at $6.9 billion, just 45 percent of the level from a year earlier, according to the Russian finance ministry. At least for this month, Moscow has signaled it will cut output by 500,000 b/d," the agency noted.
Thus, as the IEA anticipates, global oil supply should comfortably exceed demand in the first half of the year.
"Building stocks today will ease tensions as the market swings into deficit during the second half of the year when China is expected to drive world oil demand to record levels. Global demand is set to surge by 3.2 mb/d from 1Q23 to 4Q23, taking average growth for the year to 2 mb/d. Matching that increase would be a challenge even if Russia were able to maintain production at pre-war levels," the agency said.