Russian crude exports are on track to set a record this year, which is intensifying competition in Europe as Iran boosts shipments to the region.
Exports rose 4.9% to 5.55 million barrels a day in the first half of the year from the same period in 2015.
Russia’s output in June climbed 1.14% from a year earlier to 10.843 million barrels a day, with increases every month since July 2014, according to data from the Energy Ministry, Bloomberg reported.
“If production remains steady, then it will likely be a record year for exports,” said Christopher Haines, head of oil and gas at BMI Research. “This should mean competition is strong, especially with Iran sending more oil into southern Europe.”
Russia, the world’s biggest energy exporter, signaled in April it would boost oil production and shipments after the Organization of Petroleum Exporting Countries failed to adopt a plan to ease a supply glut, in part because Saudi Arabia insisted on Iran's participation.
Iran has moved quickly to increase output and regain customers in Europe after sanctions on its exports were lifted in January.
Lower profitability in domestic refining has freed up more crude for export, Ildar Davletshin, an oil analyst at Renaissance Capital, said by email.
Russian Urals crude, which is similar to Iran’s flagship blend, was the main beneficiary when Iran was barred from selling oil in Europe in 2012 because of its nuclear program.
Since sanctions were lifted, Iranian crude exports have doubled to about 2.1 million barrels a day, with shipments to Europe of 445,000 barrels a day in May, compared with about 600,000 prior to the imposition of sanctions in mid-2012.
“As far as market share wars, everyone’s aware of the efforts Middle Eastern producers are putting into expanding their presence in the markets where they haven’t typically operated, such as Eastern and Central European refineries,” said Artem Konchin, an oil analyst at Otkritie Financial Corp. “The same can be said about Russia’s drive to gain a bigger footprint in Asia.”
Russia is now on track to surpass Energy Minister Alexander Novak’s recent estimate of 252 million tons (5.05 million barrels a day) of exports and forecasts of as much as 255 million tons made by Novak’s first deputy, Aleksey Teksler, in April.
