Oil production in Russia will decrease by about 7-13% by the end of this year, predict Kept (former KPMG) partners Maxim Malkov and Marina Mizgireva in the study “Analysis of key trends and prospects for the development of Russian industries in the context of geopolitical turbulence”. RBC writes about it.

This forecast is formed on the basis of estimates of OPEC, the International Energy Agency (IEA) and the U.S. Department of Energy, specified in Kept.

“OPEC is traditionally less aggressive in forecasts and does not change it for the second month in a row. The IEA and the US Department of Energy have previously taken a more conservative position, but during 2022 they had to significantly change their estimates,” Malkov explained.

But there is still a high degree of uncertainty in the market, the RBC interlocutor noted. The key factor determining the exact level by which Russian oil producers will be forced to cut production is the success of the process of reorientation of export flows of oil products in the context of the price ceiling and the European embargo on them.

According to Argus Media, Russia has already managed to redirect a significant part of oil supplies from Europe to Asia: if last January, before the outbreak of the military conflict in Ukraine, supplies to the EU accounted for 85% of the total volume of sea supplies of Urals benchmark oil (5.16 million out of 6 million tons), then in September only 24% (1.78 million out of 7.4 million tons). India increased its Urals purchases from zero at the start of the year to more than 40% by early fall, while Turkey increased from less than 5% to 21%.

“The specifics of trade in oil products, primarily in terms of their transportation, contrast with the crude oil market, and the geography of demand is more limited – accordingly, we tend to stick to the upper end of the forecast range (a 10-15% decline, or 50-80m tonnes) and see risks for a possible larger decline,” notes Kept partner.