Russia continues to find buyers for its oil despite Western sanctions.
Although production fell immediately after Russia’s invasion of Ukraine, it bottomed out and even rose slightly recently. In May, Russian output of crude oil and related liquids rose marginally, by about 130,000 barrels per day from April to 10.55 million barrels a day, according to the International Energy Agency.
The agency’s monthly oil market report, published on Wednesday, depicts a world of oil-consuming countries in a difficult predicament. The United States, the European Union and other nations want to squeeze Russia, denying it oil and gas revenue to fuel its war in Ukraine.
So far, this effort seems to be falling short. The agency estimates that Russia earned $20 billion in May from oil sales, a $1.7 billion increase from April, partly driven by high prices.
Global oil prices are already high — with Brent crude futures at about $120 a barrel, almost double the price a year ago — and diesel and other refined product prices are even higher, and matters could worsen. If sanctions on Russia tighten, “global oil supply may struggle to keep pace with demand” in 2023, the agency warned.
Overall, Russian output is down 850,000 barrels a day — about 7.5 percent — since before the invasion of Ukraine, but the country’s industry has managed to pump faster than many analysts expected.
India is doing the most to bail out Russia. Moscow exported one million barrels of oil a day to India in April and 900,000 a day in May, a huge increase over the 100,000-barrel-a-day average for 2021. China, traditionally a large buyer of Russian crude, has also purchased more Russian oil, as has Turkey, the agency said.
These increases as well as higher prices are helping to offset a modest fall of half a million barrels a day of Russian oil and oil product exports to the European Union from prewar levels, to 3.4 million barrels a day in May. The United States has also slashed Russian imports.
The Paris-based forecasting group now says it expects that Russian production may decline by nearly three million barrels a day, or more than 25 percent, by the start of 2023 as the recent embargo imposed by the European Union gradually tightens. This forecast represents a big rollback from last month’s report, in which the agency said Russian output could fall by that amount by July.