There’s been a lot of press lately about OPEC’s effect on oil prices. With many observers wondering if surging crude exports from places like Saudi Arabia and Iran will hold back prices for the indefinite future.
But at the same time, there’s another, less-discussed oil exporting nation having a potentially bigger effect on the market. With shipments here recently surging to record levels.
Data released earlier this week from Russia’s energy ministry showed that crude exports to the end of June rose 4.9% as compared to same period of 2015 — hitting 5.55 million barrels per day. Exports for the month of June were up 1.14% year-on-year, with Russia’s shipments now having increased during every month since July 2014.
That two-year surge in exports looks ready to make 2016 a banner year for Russia’s oil shipments abroad. At current rates, exports would hit a record this year — passing the old yearly high of 253.9 million tons (1.8 billion barrels) set in 2007.
In fact, it looks like exports in 2016 could be significantly higher than that level. Showing that Russia is going all out in selling crude to foreign buyers.
A big part of the reason is Russia’s desire to compete with OPEC. With Russia’s benchmark Urals blend crude being similar to oil produced by Iran — prompting Russian producers to sell more in order to hold market share, at the same time as Iran is ramping up sales globally.
The competition between these two nations is unlikely to reduce anytime soon. Meaning there’s going to be a lot of supply coming from several places around the planet — with potential dampening effects on prices.
One x-factor on the Russian side is taxes. Which right now favour the production and export of crude oil over refined products. If policies change however, Russia’s surging exports could take a hit — watch to see what moves, if any, the government makes in this area.
Here’s to going all out,