The European Union’s embargo on Russian oil will bite into the country’s export of crude — a cornerstone of the nation’s economy — but it may not do much damage until the restrictions actually kick in.
For now, analysts say, Russian oil production is proving resilient as European buyers and others snap up the opportunity to buy crude at a discount of around $30 a barrel to Brent crude, the international standard.
Kpler, a firm that tracks petroleum shipping, estimates that Russian oil production actually edged up about 200,000 barrels a day in May, to 10.2 million barrels a day, compared with April. Still, that was about 800,000 barrels a day below February levels.
Kpler anticipates that the European Union’s embargo could cause Russian production to drop another one million barrels a day, or about 10 percent, once the restrictions come into effect. The downturn would contribute to what many analysts expect to be a broad erosion in Russia’s energy industry in coming years, as major oil companies quit the country and sanctions curb imports of Western technology.