May 11, 2022

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In January 2021, Russian oil production was 11.3 MM Bbl/d. Russia is the world’s third largest oil producer after Saudi Arabia and the US.

In December 2021, Russian exports of crude oil and condensate was 5 MM Bbl/d. Total export of refined products was 2.9 MM Bbl/d.

In 2021, Russia exported around 2.3 MM Bbl/d of oil to OECD Europe. Most exports are done via the Friendship Oil Pipeline.

China remains the largest buyer of Russian oil (1.4 MM Bbl/d in 2021). China receives oil from Russia by both tankers and pipeline.

EU plans to reduce its dependency on Russian oil via full or partial oil embargo. A Russian oil embargo must be carefully planned and executed:

  • Current Russia-EU trade utilizes smaller short-haul Afromax tankers whereas, longer haul re-routing of Russian supplies away from EU and replacement supplies to the EU will require larger VLCCs which are currently in short supply.
  • This can lead to increased oil prices which in turn would benefit Russia; albeit with wider differentials. Russian oil needs to be replaced, at least partially, by production growth in other parts of the world.
  • Some countries in Central Europe, including Hungary and Slovakia, receive oil primarily by Russian pipeline.
  • Russian companies, including Rosneft and Lukoil, own refineries in Europe.

Source: EIA