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Sources say that Russia will reduce its June oil exports due to higher refinery output and lower crude production.

Market sources say that Russia will reduce its crude exports in June as it plans to increase refinery runs amid looming fuel shortages.

According to preliminary information from industry and trading sources, crude loadings at the western?ports Primorsk (Ust-Luga) and Novorossiysk (Novorossiysk) could drop to 1.7 million barrels per day in June, down from 2.5 millions bpd.

Sources said that the decline could be partially due to a decrease in oil production levels.

Alexander Novak, the Deputy Prime Minister, said that the Russian oil production had fallen since the beginning of the year. He blamed the drop on unplanned maintenance at refineries.

Sources said that completing maintenance and repair will allow Russia's refining plants to increase throughput amid "seasonal fuel shortages and growth in demand" reported in certain regions. However, lower output will mean additional feedstock to process will have to be diverted away from exports.

The Russians estimate that they will increase their crude oil output by between 250,000 and 400,000 barrels per day (bpd) in June, but it will take a long time to restore production.

Since March, Ukrainian drone attacks on Russian pipelines, port infrastructure and refineries have reduced domestic processing. Although exporters have been able to maintain shipments so far, sources say production cuts are inevitable.

Due to attacks on ports, refineries and the only remaining oil pipeline to Europe in Russia, Russia had to cut back its oil production.

Sources believe that crude production likely continued to fall in?May. It is estimated that it fell?by around 100,000 Bpd compared to April.

Sources estimate that the drop in oil production in Russia in April was the biggest in six years, since the COVID-19 pandemic began in 2020. The decline is estimated to be between 300,000 and 400,000 bpd, compared with the previous average levels of this year, as well as a decrease of around 500,000 to 600,000 bpd, compared with the end of last year.

Industry sources stated on Wednesday that there were no spot deals made for the June-loading West Siberian Crude for domestic delivery. Producers are focused on exports, and cite this month's feedstock shortage.

(source: Reuters)