Russia's crude oil exports from its three main western ports will drop by 13% in November from the previous month to 1.95 million barrels per day (or some 8 million metric tons) as refinery maintenance season is over, two trade sources said on Thursday.
Exports from Russia's western ports of Primorsk, Ust-Luga and Novorossiisk are closely watched by market participants including the Organization of the Petroleum Exporting Countries (OPEC) members because they are the most volatile flows and heavily affected by the domestic refinery intake.
Russia has maintained high oil exports this year, while also admitting to oil overproduction, exceeding the amount agreed by OPEC+, which comprises OPEC and allies including Russia. The country promised to make additional cuts to compensate from the end of 2024.
Russia cut crude oil output in September by 28,000 barrels per day (bpd) to about 9 million bpd, OPEC said, citing data from secondary sources such as consultancies.
Russian oil loadings from its western ports will drop in November from 2.25 million bpd in October.
Russian oil refineries are expected to increase runs next month after major seasonal maintenance in September-October. In November Russian oil refining will increase: Russia plans to take offline just 1.8 million tons of its refining capacity down sharply from 4.4 million tons in October.
Lower offline refining capacity normally means higher refinery runs and less crude oil available for exports. Yet some Russian refineries are not keen to increase runs even after the end of maintenance due to weak margins, the sources said.
"Profitability of export sales is still very low due to weak (oil products) margins, discounts for Russian fuel and shipping costs," one trader involved in Russian oil product sales said.
Refinery margins are weak worldwide. Oil refiners in Asia, Europe and the United States are facing a drop in profitability to multi-year lows, marking a downturn for an industry that had enjoyed surging returns post-pandemic and underlining the extent of the current slowdown in global demand.
If Russian oil refineries decide to keep refinery processing low, more crude oil will be available for exports next month, the sources said.
