Page 104 - RusRPTOct23

Additionally, a scarcity of specific crude oil types, partly due to production cuts by OPEC+ members like Saudi Arabia and Russia, has compelled refineries to process alternative oil sources that yield less diesel-type products as the oil is lighter and sweeter. Focus on producing jet fuel to meet summer demand has further curtailed diesel output.
Consultants at Wood Mackenzie Ltd. predict a 1.5% drop in diesel yields for the next quarter compared to the previous year, equating to a loss of 1.2mn barrels per day. However, net supply will only decrease by 400,000 barrels per day as refineries intend to process more crude, reports Bloomberg.
The situation isn't entirely bleak. Refineries in the Middle East and the massive Dangote facility in Nigeria are expected to gradually increase production. The conclusion of refinery maintenance seasons will also see operations picking up speed at many sites.
On the demand side, diesel consumption is anticipated to grow by a modest 0.4% this year, according to the International Energy Agency. Despite this relatively subdued demand, the soaring diesel prices are raising eyebrows. Any unexpected surge in demand could push prices even higher.
The world is facing its largest oil deficit in 15 years. According to Bloomberg, a week ago the price of Brent oil exceeded $90 per barrel following Saudi Arabia's decision to extend the production limit of one million barrels per day until the end of the year. On September 12, November futures exceeded $92 per barrel for the first time since November 2022. Global oil inventories, which have fallen sharply this quarter, could fall even more, by about 3.3 million barrels per day, in the next three months. "If this happens, it
104 RUSSIA Country Report October 2023 www.intellinews.com