Page 13 - AsianOil Week 05 2023

AsianOil NEWS IN BRIEF AsianOil

Kazakh and Russia firms eye changes in price and volume will be than the forecast, "the cushion of stocks in
storage will disappear very quickly," said the
temporary while the market and Russia
pipeline construction to supply find new routes and customers for its oil head of the IEA, Fatih Birol, in the latter’s
latest oil bulletin.
products. A similar thing happened in the
gas to China first months of the war in Ukraine where year’s oil outlook, as it is not clear how
Russia remains the “dark horse” in this
Russian exports fell as traders avoided
Kazakh and Russian firms are looking into buying the Urals blend and the discount it will respond to the new sanctions due
constructing a pipeline that would supply increased then as well. However, after a few in February. In December, production
gas to northeastern Kazakhstan as well as months traders in Asia – in India and China decreased slightly to 11.2mn bpd, but the
export fuel to China, Energy Minister Bolat in particular – stepped in to buy the very consequences of the embargo on petroleum
Akchulakov said on February 2. cheap Russian oil driven by market forces. products, which are much more widely
The two sides were considering a pipeline Analysts assume that something similar will distributed in Europe, will be much more
that would transport natural gas from happen now, but where the export volumes severe, the IEA says. Currently the agency
Russia’s Omsk and Barnaul cities to the and prices will settle remains a matter of is forecasting a decline in production of
Kazakh town of Alashankou. debate. 1.6mn bpd in the first quarter and of 1.3mn
From Alashankou, the gas could be The IEA predicts that there will be a bpd to 9.7mn bpd on average for the whole
supplied to the Kazakh city of Pavlodar, turning point in the international oil market year compared to 2022, The Bell reports.
while a separate branch of the pipeline in the middle of this year. The latest IEA's Russian President Vladimir Putin
would connect to China. Monthly Oil Statistics report including has already lost the winter energy battle
Russia has been reorienting some of its October 2022 data shows that for the main with the West thanks to record imports
gas exports towards China amid Western areas within the OECD: of LNG and an unusually warm winter.
sanctions over Moscow’s invasion of Birol believes that Russia will also lose the
Ukraine. · Total OECD production of crude wider energy war with the West starting
oil, NGL and refinery feedstocks increased with defeats in the coming quarters in
by 4.3% in October 2022 compared to the expanding oil sanctions war, and even
IEA expects an inflection in oil October 2021. more so in the coming years as Europe
remakes its energy supplies. It will become
markets in 2023 when demand products grew by 1.9% on a year-on-year increasingly clear that India and China
· Refinery gross output of total
will not be able to entirely replace Russia’s
will exceed supply basis. European customers, the IEA believes.
On the same day the world's largest
The International Energy Agency (IEA) · Net deliveries of total products oil company, Saudi Aramco, released its
reports that oil demand this year will decreased by 1.5% in October 2022 outlook for 2023. It also hopes for a Chinese
grow by 1.9mn barrels per day, to a record compared to October 2021. recovery and predicts additional demand
101.7mn bpd, and supply by 1mn bpd, to for jet fuel, pointing to a shortage of new
101.1mn bpd, in its first monthly report for · Oil stock levels on national territory production of 4mn-6mn bpd.
2023 released on January 18. Russia’s federal grew by 396,000 tonnes in October 2022 After the IEA’s forecasts of record
budget is already under pressure from compared to the closing stock levels in demand, the price of Brent rose above $87 –
tumbling oil and gas revenues but with a bit September 2022 and closed at 472mn the level of early December – before falling
of luck a rise in oil prices in the second half tonnes. back to $85 by the close of trading.
of this year could take some of the pressure For Russia the price of Brent is critical
off. In the first quarter, the IEA predicted for the budget. The introduction of the
The oil market has already been hit by an excess of oil on the market of about crude embargo has already seen Russian
the oil price cap scheme and EU embargo 1mn bpd, but in the second that figure budget revenues tumble in December to
on the import of Russian crude that went will decrease significantly. By the third end the year with a 2.3% of GDP deficit,
into effect on December 5. It will receive and fourth quarter, demand will already almost all of which was due to a collapse
a second blow when a similar two-speed exceed supply by 1.6mn and 2.4mn bpd in Urals oil prices in December. For 2023,
embargo and price cap regime is introduced respectively, pushing up prices, The Bell the government is now forecasting that
by the EU on February 5 that will further reports. the deficit will widen from around 2% to
affect supplies. However, oil prices for Brent Just when the inflection point arrives will 3% as a result of the changes in oil and gas
rose to $85 after the IEA released its report depend on two factors: the speed of China's revenues expected this year.
on January 18. economic recovery and the reaction of Currently it’s not unclear how the
So far, the EU ban on crude has led Russian production to the EU embargo on price of Urals will be affected by the new
to a fall in Russia’s exports of crude as petroleum products. sanctions after February 5, but it is obvious
international tanker companies shy away The IEA is not optimistic about the that Russia cannot replace Europe with new
from Russian oil, afraid of secondary prospects for the Chinese economy, but customers for all oil products it currently
sanctions. The discount on the Russian nevertheless predicts that China will exports there. Russia will have to reduce
Urals blend of oil has also blown out to account for almost half of the global growth both refining and oil production as a result.
almost 50% against the benchmark Brent in oil demand (850,000 bpd) in 2023, and Domestic experts consider $40 per barrel
blend. will outstrip India. as the level that will cause severe problems
However, analysts speculate that these If the recovery turns out to be stronger for the budget and in December-January,

Week 05 04•February•2023 www. NEWSBASE .com P13