The Russian government insists that the country has cut oil output as promised. But all the available numbers day that Russian crude oil is flowing at above levels agreed with OPEC.
Of course, it’s hard to tell because Russia has stopped reporting key export figures. Russia restricted oil-output data last year due to its “sensitive” nature. And Russia’s Federal Statistics Service stopped publication of crude and condensate output earlier this year until April 2024, following a government decree.
That has left oil industry analysts seeking to extrapolate Russia’s crude exports from data such as seaborne shipments. From that indicator it looks like Russian crude flows to international markets are more than 1.4 million barrels a day higher than they were at the end of last year. Shipments have also risen since February, the baseline month for the pledged production cut.
There is little evidence that the promised 500,000 barrels a day of cuts have been made
Russia has sought to explain the higher shipments by pointing to the diversion of oil previously piped to Germany and Poland to seaborne traffic. But the increase in seaborn totals is more than can be accounted for by the diversion of pipeline flows or lower refinery runs. But that switch happened in January and February, before the output cut was due to come into effect, and flows of Russian crude through the pipeline, now limited to deliveries to Hungary, Slovakia, and the Czech Republic, have been stable at about 240,000 barrels a day since February.
The combined volume of crude on vessels heading to China and India plus smaller flows to Turkey and quantities on ships that haven’t yet shown a final destination remained virtually unchanged at a revised 3.62 million barrels a day in the latest four-week period. Four-week average shipments to Russia’s Asian customers, plus those on vessels showing no final destination, crept up to 3.42 million barrels a day in the period to June 4 from 3.38 million barrels a day in the four weeks to May 28.
This apparent Russian “cheating” on oil production quotas is a big part of the reason that the unilateral production cut by Saudi Arabia announced over the weekend has had so little influence on pushing oil prices higher.
Oil prices have dipped again today with, as of 1 p.m. New York time, West Texas Intermediate down 0.30% to $72.93 a barrel, and international benchmark Brent crude off 0.40% to $76.40 a barrel.
