Macro

Russian Oil Exports Plunge to $17.2B Amid Drone Strikes, IEA

Russian oil exports fall to a 5-month low, reducing revenue to $17.2 billion amid sanctions and global market pressures.

By Mackenzie Crow

5/15, 04:30 EDT
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Key Takeaway

  • Russia's oil exports fell to a 5-month low at 7.3 million barrels/day in April, reducing revenue to $17.2 billion due to drone attacks and output cuts.
  • Despite Western sanctions and price caps, Russia's export prices rose, with refinery runs slightly impacted by drone strikes but less severely than expected.
  • Voluntary OPEC+ production cuts were partially implemented by Russia, with crude output at 9.3 million barrels/day, above the target.

Russian Oil Exports Wane Amid Challenges

Russia's crude and petroleum product exports have declined to their lowest levels in five months, as reported by the International Energy Agency (IEA). In April, the nation exported 7.3 million barrels a day, a 6.4% decrease from March, with product flows experiencing a nearly 15% drop to 2.3 million barrels a day. This downturn is attributed to Ukrainian drone attacks on key Russian refineries and planned output cuts, which have significantly impacted Russia's oil revenue, reducing it to $17.2 billion in April from $18.4 billion the previous month. Despite higher prices for Russian crude and fuel partially offsetting the impact of lower exports, the oil industry's contribution to the Russian budget, already strained by military and social expenditures, is under pressure.

Sanctions and Strategic Responses

The West's sanctions, including price caps on Russian oil, aimed at limiting Moscow's war funding capabilities, have had a mixed impact. The IEA notes that Russian refineries have managed to avoid heavy production losses from drone attacks, with refinery runs estimated at around 4.9 million barrels a day in April. The agency has revised its estimates for the impact of these attacks, now expecting a limited effect of 150-200 thousand barrels a day on average during the second quarter of 2024. Additionally, Russia's strategic use of spare crude processing capacity and quicker-than-expected restarts of damaged facilities have mitigated the impact on crude throughputs. Despite these challenges, the average weighted export prices for all Russian crude blends in April remained above the G7 price cap, indicating a limited impact of Western price restrictions on Russia's oil revenue.

Global Oil Market Dynamics

The global oil market is currently experiencing downward pressure, with Brent crude trading around $82.55 per barrel. This trend is influenced by uncertainties surrounding demand, especially from the US, where high interest rates are expected to dampen economic growth and fuel demand. The IEA has also adjusted its outlook for global oil demand growth, now forecasting an increase of 1.1 million barrels a day this year, 140,000 barrels less than previously expected. This adjustment reflects a contraction in first-quarter demand in wealthy nations and a mild winter in Europe affecting gasoil consumption. Despite these adjustments, global oil consumption is still on track to reach a record 103.2 million barrels a day this year.