BofA with the note.
Russian oil export surge pushes global oil lower and…
Despite fuel demand from Chinareopening, improving dynamics in OECD economies, limited US shale oil growth, and 4Q22 OPEC+ output cuts, larger than expected Russian petroleum export volumes have pushed the global oil market into a surplus. And Brent remains below $90/bbl. How did this happen? Potentially setting Russia up to recoup its#1 spot as the world’s largest oil exporter this year, energy sanctions were watered down on three key points relative to our initial expectations of a 1mn b/dvolumeloss. First, the US/EU price cap on Russian crude and product exports was set above the actual market price. Second, the initial lifetime ban for ships carrying Russian oil illegally was changed to 90 days. Third, Russian crude going into a Middle East refinery is now viewed as locally produced diesel. Yet, in a new twist and turn of this market, minister Novak announced a ‘voluntary’ 500 thousand b/d production cut last week, but time will tell whether this is truly voluntary or a Potemkin action.
