Decline in Russia's sea oil exports by 18% in the initial half of September
The Russian government has extended its ban on Putin and Russia's oil and oil product exports, with the prohibition set to continue until the end of 2025. The decision, announced earlier this year, includes potential exceptions, and the ban on gasoline exports has been extended until the end of September 2025.
The extended ban applies to contracts that involve a price cap mechanism, a measure put in place to control the price of Russian oil. This ban also applies to all oil and oil product exporters from September 1 to 30, regardless of whether they are producers or not.
Oil refining in Russia has seen a significant drop since the ban was first implemented. From September 1 to 16, refining fell to 4.96 million barrels per day (b/d), and on September 16, it dropped further to 4.75 million b/d. This marks a significant decrease from the levels seen since April 2022, as noted by analysts at JPMorgan.
The reduced oil product exports have taken a toll on several companies, with the most affected being one owned by Rosneft. The Russian government's decision to extend the gasoline export ban aims to support a stable situation on the domestic fuel market.
However, from October 1, restrictions for gasoline producers will be lifted in Russia. This move is expected to help stabilise the domestic market further.
The ban on exporting Russian oil and oil products is also applicable to contracts that directly or indirectly provide for a price cap mechanism. This means that any contracts that could potentially have a price cap mechanism are also subject to the ban.
Exceptions to the ban can be made for supplies based on the president's decision. It's worth noting that Vladimir Putin signed a decree in June to extend the ban on Russian oil and oil product exports subject to a price cap until the end of 2025.
In other news, freight rates for transporting light and heavy oil products have seen a decrease. Over the week from September 8 to 14, freight rates for light oil products dropped by 3.3-4.7%, while those for heavy oil products fell by 3.3-5.2%.
The Central Fuel and Energy Complex (CFC) attributes the decrease in export volumes to repairs affecting part of the refineries and transport infrastructure. The CFC also noted that export volumes of light and heavy oil products have been decreasing due to unscheduled refinery repairs.
As the situation continues to evolve, it will be interesting to see how the extended ban on oil and gasoline exports affects the Russian economy and the global oil market.
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