FIS: Crude Oil Market Overview: Russia becomes largest oil exporter to China

Chinese imports of Russian oil reached 8.42 million tonnes according to data from the Chinese General Administration of Customs. This put Russia as the top exporter into China in May, knocking Saudi Arabia from the top stop despite their export volumes being up 9% year-on-year at 7.82 million tonnes.

There was a similar story in Chinese imports of Russian LNG, which was nearly 400,000 tonnes last month, up 56% from the same time last year.

The main loser for exports into China was the United States, whose export volumes to China were down 52% year-on-year at around 0.5 million tonnes and Brazil which was down 19% at 2.2 million.

Russian seaborne exports were at record levels in the past 4 years at nearly 160 million barrels.

OPEC oil production figures for May showed a drop in month-on-month production of 176,000 barrels per day (bpd). OPEC’s total production last month was an average of 28.508 million bpd with lower production in Equatorial Guinea, Venezuela, Iran, Iraq, Gabon, Nigeria, and most significantly in Libya which was down 86,000 bpd. Although Saudi Arabia did increase production, this was not enough to offset losses by other members of the oil group.

The increasing concern about high oil prices in Europe is forcing them to look further afield for their oil supplies. The first European imports in 2 years from US-sanctioned Venezuela have resumed.

Despite fears of a shutdown of Libyan ports and oil-producing areas from protests, the country is currently maintaining oil output at about 700,000 barrels a day, according to western diplomats and analysts. The United States has renewed efforts to bring the different sides of the Libyan civil war to an agreement to increase the country’s oil output which has been disrupted by civil strife since 2011.

The IEA predicts that world oil demand will outpace supply in 2023, with Russian oil output falling by 3 million bpd. Despite a predicted significant increase in U.S. domestic oil production, the think tank expects demand next year to grow by 2.2mn barrels a day to 101.6mn bpd, driven by developing countries, outpacing supply with a predicted 520,000 bpd drop in OPEC+ output.

Written by Edward Hutton, Edited by Chris Hudson (https://freightinvestorservices.com/fis-live/).