Russia boosts oil production, but increase may be short-lived - Reuters
Photo: oil pumpjack (Getty Images)
Russia increased oil and gas condensate production in July after a decline the previous month. However, maintaining that level in August will be difficult due to new attacks on oil refineries and ongoing export logistics problems, according to a Reuters report.
Growth proves temporary
According to two Reuters sources, Russia increased oil and gas condensate production by about 100,000 barrels per day in July compared with June. Total output exceeded 9 million barrels per day.
The increase was supported by higher refinery utilization rates and strong crude export volumes.
Sales of crude oil and petroleum products remain one of the main sources of revenue for the Russian budget. As a result, Moscow continues to keep supplies at the highest possible level despite Western sanctions and recurring attacks on its oil infrastructure.
Threats to the oil sector
Reuters sources said Russia is unlikely to maintain July's production levels in August. They cited an increase in drone attacks on Russian refineries in late July and early August, as well as a shortage of tanker capacity in the Black Sea.
According to the sources, these factors could force producers to reduce output because their ability to export additional volumes of crude oil may be constrained.
Russia's central bank has previously acknowledged that lower production earlier this year was linked to damage at oil-processing facilities and limitations in export infrastructure.
In a report, the regulator said redirecting surplus oil volumes to foreign markets had been difficult due to insufficient capacity in the country's transportation and port systems.
Exports remain in question
According to industry sources cited by Reuters, Russia expects to increase crude oil exports through its western ports by about 4% in August compared with July. The additional volumes were expected to result from unplanned shutdowns at several refineries.
However, new drone attacks could disrupt those plans. Several Russian refineries have temporarily suspended operations over the past week following strikes.
In particular, the governor of Russia's Yaroslavl region reported a fire at a local refinery after a drone attack.
Earlier, Ukraine's Security Service (SBU) said that, together with other units of the Defense Forces, it had struck the Slavneft-YANOS refinery in Yaroslavl, located more than 700 kilometers (435 miles) from Ukraine's state border. In addition, two Russian FSB coast guard vessels stationed in Kerch were reportedly hit.
