MOSCOW (Reuters) – Russian refineries are processing more crude oil in hopes of boosting fuel exports after new U.S. sanctions on Russian tankers and traders made exports of unprocessed crude more difficult, two industry sources said and data showed.
Russia has been trying to adapt to Western sanctions imposed in response to the invasion of Ukraine since 2022 by buying a new fleet, redirecting oil exports to Asia from Europe and finding new fuel customers in Africa and Latin America.
The latest US sanctions imposed on Russia's oil industry in January have made crude exports to key Asian customers in India and China more costly and complicated.
Russian refining runs rose 2%, or 108,000 barrels, to 754,800 metric tons per day on January 15-19 from the first week of the year, according to the sources.
It was also up 1.2% from the average for January 2024.
The sources requested should not be named because they were not authorized to speak publicly.
Russia has slightly wider options for fuel exports compared to crude oil thanks to the G7 price cap.
Under the cap, Moscow can use the West's fleet and shipping services if it sells crude at prices below $60 a barrel and diesel at below $100 a barrel.
The price cap of $60 per barrel is below the current price of Russia's flagship Urals blend of around $70.
Traders say for now the price cap placed on products that trade at a premium to crude, mainly diesel – at $100 a barrel – still leaves room for profit. Russian diesel is currently trading at around $75 a barrel.
They also note that vessel availability is higher for fuel than for crude.
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Russia's efforts to boost refining are being complicated by Ukraine's drone attacks and the overheating economy.
Russia's top oil producer, Rosneft, has also said it may have to abandon refinery modernization plans.
Still, the sources said Russian refineries were producing as much as they could bet on a higher chance of finding ships to export fuel after crude tankers were approved.
“We have to use oil processing as much as we can in order to use (the sanctioned oil),” said an industry source,
The sanctions, announced by the Biden administration in early January shortly before new US President Donald Trump took office, targeted around 180 tankers involved in transporting mainly Russian oil and much smaller volumes of fuel .
In 2024, those tankers were carrying about 1.5 million barrels of crude oil a day and just 200,000 barrels a day of refined products, according to a Morgan Stanley analysis.
The sanctions also targeted Russian oil companies Surgutneftegaz and Gazprom Neft.