NEW DELHI: Discount on Russian crude oil fell $12.20 per barrel, lowest level since March 2022, according to a report by the International Energy Agency (IEA). The weighted average crude export price increased by $8 per barrel to $81.80 per barrel in September 2023. However, the country continues to profit from oil exports, even in the face of various sanctions imposed by Western countries. According to the monthly oil data report, Russian oil export revenues surged by $1.8 billion to $18.8 billion in September 2023, marking their highest level since July 2022.
“Total oil exports increased by 460 thousand barrels per day (kb/d) to 7.6 million barrels per day (Mbd), with crude oil accounting for 250 kb/d of the increase. The weighted average crude export price rose by $8 per barrel to $81.80 per barrel, narrowing its discount to North Sea Dated to $12.20 per barrel, the lowest level since March 2022,” reads the report.
Following the Ukraine and Russia war, European countries shunned importing Russian crude and gas. However, Russia diverted its supply to Asia, and India emerged as the major beneficiary of discounted Russian crude. India, which imports 85% of its total oil, significantly increased its crude imports from Russia. Prior to the Ukraine and Russia war, Russia accounted for less than 2% of India’s oil imports, but in the past seven months, it has become India’s top oil supplier.
As per Vortexa, a London-based market intelligence provider, in September 2023, India imported nearly 36% or 1.58 million barrels per day (Mbd) of its total crude requirement from Russia. In August 2023, the country imported 1.44 million bpd from Russia. However, as Russia’s discount decreased, India began to return to its traditional suppliers, Saudi Arabia and Iraq.
Meanwhile, the report also noted that the ongoing Israel-Hamas conflict has not directly impacted oil flows. It also predicts that the global crude oil supply will increase by 1.7 million barrels per day in 2024 and 1.5 million bpd this year, reaching record highs, despite production cuts by major oil producers. The supply will come from non-Organization of the Petroleum Exporting Countries like the USA and Iran.
“World oil output rose 270 kb per day in September to 101.6 mb/d, led by higher production from Nigeria and Kazakhstan. The Israel-Hamas conflict has not had any direct impact on oil flows… Overall OPEC+ output is set to decline in 2023, although Iran may rank as the world’s second largest source of growth after the United States,” reads the report.