Russia is raising oil output for a third month in a row, even as sales to China and India are dropping off

Oil refinery — Asian buyers are backing out of Russian oil as its production ramps up.
Photo by Christian Ender/Getty Images

Russia's oil output is rising for the third consecutive month, despite falling deliveries to China and India.
It produced 10.78 million barrels a day in the first half of July — a 0.6% gain from June, per Bloomberg.
Rising demand at home is offsetting a dip in exports, with Russian refineries runs for domestic facilities up 6%.

Russia has ramped up its oil production for the third consecutive month despite a fall-off in deliveries to India and China, as domestic buyers step in, according to a Bloomberg report.

Rising demand from buyers at home in the first half of July helped Moscow make up a slight drop in exports to main markets, per the report Monday.

The oil-rich nation pumped an average 10.78 million barrels a day from July 1-17. That's a rise of 0.6% from the comparable June level — marking a faltering in the pace of recovery for Russian oil output, after a 5% rise in June.

Its production initially fell in March and April after Russia began its war on Ukraine, as buyer self-sanctioning and bans on exports hit demand from the Europe and the US. Then its output started to recover as buyers in Asia, among others, snapped up oil at discounted prices.

Now, though, its crude shipments to China and India — which in June accounted for 50% of Russia's seaborne oil exports — have dropped nearly 30% from their peak after the war in Ukraine began. Flows to Asia hit their lowest four-week average in nearly four months, when they slipped to 3.24 million barrels a day in the week to July 15.

Offsetting some of those foreign declines, Russian refineries have stepped up their runs, and supplies to domestic facilities were 6% above the average for June at 5.75 million barrels a day.

Russia has been reeling in hefty profits from selling its oil at cheaper prices to Asia since the country invaded Ukraine. Its sales have helped the Kremlin add $9.5 billion to an emergency fund, even as sanctions batter its economy.

For Moscow to suffer a hit to oil income from a drop in foreign buyers, global demand overall would need to fall, analysts have said — something that's unlikely to happen.

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