Page 9 - FSUOGM Week 31 2022

FSUOGM PERFORMANCE FSUOGM

Russian oil output recovers in July

RUSSIA RUSSIAN oil and petroleum product output exports and, presumably, increase in refined
continued its recovery in July, as the country’s product exports reflects changing profitability of
The recovery frustrates exporters adapt to the Western sanctions regime. various options available to Russian integrated
Western efforts to curb Oil output rose 2% month on month to oil companies, we think, and are likely due to
Russian hydrocarbon 10.7mn barrels per day, while crude exports were improved shipping arrangements for export-
revenues. down 1.4% and refining throughput climbed 4% ing refined products,” the brokerage continued.
by 5.66mn bpd, according to data published by “This seems logical: the continued discount
Kommersant. Russian crude production is still on Urals, even if significantly smaller than it
0.8mn bpd shy of the country’s OPEC+ quota, was just a few months ago, means that refined
and 2.7% below its level in February, owing to product exports should generate a larger profit
sanctions and other fallout from the war in margin.”
Ukraine. Moving forward, BCS GM expects Russian
“Our view remains that world trade routes exports and production to decline again when
will continue to change in response to the mis- Europe is set to introduce its embargo on Russian
pricing created by European efforts to block the crude exports on December 5, and on refined
impact of Russian oil and refined products into products on February 5 next year. This will be
that market,” analysts at BCS Global Markets “followed once again by a months-long, and
(BCS GM) wrote in a research note on August 1. perhaps years-long, recovery in output much as
Urals is currently trading at a $20-35 per bar- we have seen between February and July of this
rel discount to Brent as a result of buyers shun- year,” the brokerage said.
ning the product and complications caused by G7 allies are discussing the introduction of
sanctions, but at the same time this is also pro- a price cap on Russian oil in an effort to limit
viding “a powerful incentive for bargain hunt- Moscow’s revenues. The proposal looks unlikely
ing consuming countries and international oil to be supported by major Asian buyers of Rus-
traders to create ways to get Russian oil and oil sian crude, however, and energy experts have
products to market,” BCS GM said. expressed scepticism that it will work in prac-
“The simultaneous decrease in Russian crude tice. ™

POLICY

G7 seeks to advance Russian oil price cap

GLOBAL THE G7 group of wealthy Western nations have The group of nations also said it would look
proposed imposing a ban on all services that to reduce its reliance on civil nuclear and related
China and India have support the transportation of Russian seaborne goods from Russia, and assist other countries in
not signed up, however, crude oil and petroleum products, unless the oil diversifying their supplies as well.
and Beijing looks very is bought at or below a price determined with The success of the price cap on Russian oil
unlikeyl to now given international partners, the group said on August will greatly depend on whether the West can
tensions over Taiwan. 2. get China and India on board with the idea,
The move is aimed at advancing a plan to and appeals to Beijing appear doomed in light
impose a price cap on Russian oil imports, of the recent spat over US House of Represent-
designed to strip Moscow of revenues that it can atives Speaker Nancy Pelosi’s visit on August 2
use to fund its war in Ukraine, while avoiding to Taiwan. China’s government has condemned
an outright ban on Russian crude shipments that the move as a threat to peace and stability, and
would be less likely to gain the support of buy- has responded by announcing joint military air
ers in Asia and would drive up the international and sea drills near Taiwan, and test launches of
price. conventional missiles in the area. ™
“We continue to explore further measures
to prevent Russia from profiting from its war of
aggression and to curtail Russia’s ability to wage
war,” the G7 said in a statement. “As we phase
out Russian energy from our domestic markets,
we will seek to develop solutions that reduce
Russian revenues from hydrocarbons, support
stability in global energy markets and minimise
negative economic impacts, especially on low-
and middle-income countries.”

Week 31 05•August•2022 www. NEWSBASE .com P9