Russia’s oil output is edging back towards pre-war levels, and a revival in large and small refineries scattered across the country is a major driver of the change.
This isn’t just a domestic concern for Russia. Oil watchers around the world are closely following oil-production trends in the country, which is a top-three crude producer. The initial disruption to its energy industry after the invasion of Ukraine contributed to a 50% jump in crude prices this year, pushing inflation higher and threatening recession.
The growth in Russian refining may continue for the next two months, said Viktor Katona, head of sour-crude analysis at data and analytics firm Kpler. “Looking into July, we expect demand to hit 5.3-million barrels per day, implying even further run rate hikes over the upcoming weeks, only to reach the 2022 peak rate of 5.48-million barrels per day in August,” Katona said.
Domestic demand isn’t the only factor. Smaller or less modernised refineries that focus on exports of heavy oil products halted or reduced their runs in March and early April as they had difficulty exporting their fuel due to a US import ban. Since then, they have found new customers, mainly in Asia and the Middle East, hungry for feedstock for their power plants.
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