Despite crude oil production cuts, India & China continue to account for 80% of Russia’s exports

2023-08-11 14:20:13

For the third straight month, India and China, the world’s top fossil fuel consumers, collectively accounted for 80 per cent of Russia’s total crude oil exports in July this year, the International Energy Agency (IEA) said on Friday.

Russian oil exports held steady at around 7.3 million barrels per day (mb/d) in July, as a 2,00,000 barrels per day (b/d) decline in crude oil loadings was offset by higher product flows.

“Crude exports to China and India eased m-o-m but accounted for 80 per cent of Russian shipments. Higher oil prices, combined with narrowing discounts for Russian grades, pushed estimated export revenues up $2.5 billion to $15.3 billion, $4.1 billion below year-ago levels,” IEA said in its oil market report for August.

Trade sources said that Russia accounts for around 44-45 per cent of India’s total crude oil imports, while it constitutes more than 20 per cent of China’s cumulative in-bound shipments.

Market tightening

IEA pointed out that global oil prices moved steadily higher during July and into early August, reflecting a market tightening long projected by this agency. Deepening OPEC+ supply cuts have collided with improved macroeconomic sentiment and all-time-high world oil demand.

“North Sea Dated rose by $10/bbl over the month to around $85/bbl, its highest since April. With output cuts hitting the heavy sour crude market hard, Dubai crude is trading at a rare premium to Brent, while the price of Urals crude has breached the G7-led price cap now making all Russian oil exports ineligible for G7 and EU maritime services,” it added.

World oil demand is scaling record highs, boosted by strong summer air travel, increased oil use in power generation and surging Chinese petrochemical activity. The demand is set to expand by 2.2 mb/d to 102.2 mb/d in 2023. It hit a record 103 mb/d in June, and August could see yet another peak. Global oil supply plunged by 9,10,000 b/d to 100.9 mb/d in July.