Pump it, while expensive

Sergey Kondratiev, Deputy Head of the Economic Department of the Institute for Energy and Finance, commented on the oil production dynamics in November-December 2022 to the Kommersant newspaper.

According to Kommersant, less than three weeks before the entry into force of the EU embargo, Russian oil companies are increasing oil production, almost reaching the levels of the beginning of the year. Thus, by mid-November, the industry produces an average of 1.48 million tons per day, and also continues to increase oil refining. At the same time, exports to non-CIS countries have already begun to decline, falling by 5% compared to the same days in October.

According to the expectations of Sergey Kondratiev, in December there may be a decline in production by 3-5% due to the introduction of a ban on oil supplies by sea. According to him, as the example of the coal embargo shows, although individual supplies can be carried out after the imposition of restrictions, a reduction in volumes is likely. He also draws attention to the fact that, according to Platts data, the spreads between the Emirati Dubai and East Siberian ESPO, as well as between Urals and Brent, have not yet increased, that is, Russian oil is not getting cheaper relative to peers, and this does not create incentives for Asian buyers to increase purchases.