Russia did not fulfill the threat and did not reduce production in March by the promised 500 thousand barrels per day, according to the International Energy Agency (IEA), the reduction amounted to only 290 thousand barrels per day, thus the Russian authorities deceived world markets. This is reported by Bloomberg with reference to the monthly report of the IEA.
Moreover, oil exports from Russia in March rose to a record level since the coronavirus pandemic, while revenues from these exports are almost two times lower than in 2022. The IEA concludes that Western sanctions on oil and petroleum products are working exactly as intended. According to the agency, in March, Russia supplied world markets with an average of 8.1 million barrels per day – a record since April 2020, the IEA explains the growth in exports by large discounts on Russian oil products, which attract buyers.
However, high discounts have a negative impact on export earnings. The IEA admits that due to the growth of exports compared to February, total revenues increased in March, but they are still 43% below the levels of March 2022 and amount to $12.7 billion. The average price of a Russian barrel of Urals brand in March, according to the agency , was $2 lower than in February, and amounted to $50.67 with a ceiling of $60 per barrel. At the same time, the average price of Urals when sold directly in the ports of the Black and Baltic Seas (excluding insurance and transport costs) is generally $44.46 and $44, respectively.
The only grade of oil that is traded above the ceiling is the ESPO premium brand (it is especially loved in Asian markets), but it is also traded at a significant discount relative to Brent – at $67.5 per barrel. The export of "dirty" and "clean" oil products also takes place in accordance with the established limits of Western countries, the agency notes, which significantly reduces the income of Russian companies.
In early February, Deputy Prime Minister and former Energy Minister Alexander Novak argued that Russian companies would cut oil production by 500,000 barrels per day to protect their own market and increase the country's revenues. According to him, oil production in Russia in February was 10.2 million barrels per day, although this estimate contradicts his own words, which the Deputy Prime Minister said in early February, when production was estimated at 9.8-9.9 million barrels. per day – at the same time he claimed that in February the government expects a similar level of production.
However, the IEA does not trust these figures and states that in February, oil production in the country was approximately at the level of 9.9 million barrels, and in March – 9.58 million barrels per day, so the Russian authorities did not fulfill their own promise and reduced production by only 290 thousand barrels per day instead of 500 thousand barrels. The Russian authorities could mislead the market as part of the so-called “verbal interventions” (deliberate tough statement with the aim of manipulating the market), in the case of Russia, this could lead to an increase in oil prices, which would be beneficial to the Kremlin. Bloomberg also recalls that last year the Russian authorities classified oil export data in order to make it difficult to estimate real exports.
