Russian oil companies ramp up exports in May to meet Asian demand Ship’s crew


MOSCOW, May 4 (Reuters) – Russia is expected to boost sea oil exports from its western ports to a four-year high this month to meet Asian demand for cheap oil, two sources linked to the ports’ loading plans said are familiar.

Weaker global prices mean Russian oil is trading below $60 a barrel, the price cap imposed by Western countries, making it more attractive to Asian buyers who face fewer banking and compliance issues.

Oil exports from Russia’s main western markets of Primorsk, Ust-Luga and Novorossiysk will collectively reach 2.42 million barrels per day (bpd) this month, up slightly from 2.38 million bpd last month, according to Reuters calculations based on data provided by sources.

May exports from ports will be nearly 2% higher than April and the highest since 2019, Reuters data showed.

Oil cargoes from Primorsk and Ust-Luga will reach 7.5 million tons, including transit from Urals and Kazakhstan, sold as KEBCO oil grade, up from 7.2 million tons in April.

The G7 countries imposed a price cap to curb Moscow’s revenue, which came into effect on December 5.

Below the cap, Russian casks sold below $60 per barrel on an FOB basis, which excludes freight and insurance, can be shipped and insured at the port of loading by Western companies, while quantities sold above the cap can be shipped by are excluded from the Services.

Aside from weaker oil prices facilitating trade, more oil is available for export as oil refineries in Russia undergo seasonal maintenance in May, reducing domestic demand.

Russian refiners are expected to ramp up production rates in June as they emerge from maintenance and volumes of crude oil available for export are likely to fall.

For May, high export volumes have pushed up freight rates, traders added, raising costs for market participants.

The prices on the spot markets are also rising, fueled by the Asians’ desire to buy.

The cost of Ural oil shipments from Baltic ports to India rose to $7.7-7.8 million from $7.5-7.6 million a week ago, the sources said.

Last week, the Ural price discount narrowed to $10-$12 a barrel versus DES-based (Delivery Ex-Ship (DES)) dated Brent in Indian ports, from minus $13 a barrel for April cargoes, so the three dealers.

(Reported by Reuters; Edited by Barbara Lewis)

(c) Copyright Thomson Reuters 2023.

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