S&P Global Platts: Russian refiners keep output low as OPEC+ cuts tighten crude supply

Moscow, July 15 - Neftegaz.RU. Russian refineries are keeping output low despite the end of spring turnarounds, as crude availability becomes tight as a result of cuts agreed by OPEC and its allies, according to trading sources. "There is a dearth of crude supply, and volumes are reduced," a trader said.

Refinery throughput at Russian refineries has fallen significantly since April, partly on seasonal maintenance and run cuts in the wake of the coronavirus pandemic and subsequent lockdowns, but also as a result of the OPEC+ crude output cuts.

Exports have also been reduced; crude oil throughput at Russian ports in the first 6 months of the year fell 6.8% to 128.8 million mt, the Association of Russian Commercial Seaports said July 14.

Refinery throughput in May was around 21 million mt, down from 25 million mt in March, as a host of refiners started spring maintenance in April. However, although refineries gradually started up in June, throughput continued to fall and was around 20.5 million mt last month.

Product demand, especially for premium unleaded gasoline, recovered faster than expected, pushing prices to record highs. Gasoline continues to face a dearth of supply in July, even as all refineries except the Astrakhan gas processing plant are back online, according to sources.

Refineries "did not add much in terms of availability," another trader said, adding that refineries normally ramp up their sales after maintenance works end. In order to cover the gasoline shortfall, refineries have been reducing naphtha output and increasing gasoline production. "Many who wanted to make naphtha are now maxing gasoline production," another source said.

Nevertheless, gasoline supply remains low, at a time when demand in Russia is likely to exceed last year's due to increased domestic travel. "This summer Russians will take holiday in the Russian south," a trader said.

In its latest monthly report, the IEA said: "In 2019, 10 million Russian holidaymakers visited the EU, and now they will have to find mostly domestic alternatives to their usual Mediterranean destinations. This may yet result in a mini-boom for domestic gasoline demand this summer."