Disruptions due to contamination of crude oil in a major Russian pipeline leading to Europe are forcing the country to cut oil output by as much as 10 percent for several days, industry sources told Reuters.
Russian oil producers received a request from state-run pipeline monopoly Transneft to reduce oil output by 900,000 tons, or about 6.6 million barrels, until May 7, two industry sources told the news agency.
That represents more than 1 million barrels per day (bpd) over the next five days or about 10 percent of output from the world’s second largest crude exporter, according to calculations. Transneft declined to comment.
“This just shows this disruption is extremely serious. Russia has had its major export pipeline and port either shut or not functioning properly in the last 10 days, so output cuts are unavoidable,” said a Russian oil buyer with an oil major.
Russia halted oil flows in the Druzhba pipeline to Eastern Europe and Germany last week because of contaminated crude, contributing to a rise in global oil prices to a six-month high and leaving refiners in Europe scrambling to find supplies. Oil sent to the Baltic port of Ust-Luga was also tainted.
Transneft has promised to resume normal flows of oil to Ust-Luga by May 7 but said it may take longer to resume normal operations along Druzhba.
Belarus has said it could take months to fix the pipeline issue, while refiners across Europe have been cutting runs and asking governments to allow them to use strategic oil reserves.
At least 5 million tons of oil, or about 36.7 million barrels, have been contaminated by organic chloride, a compound used to boost oil extraction but which must be removed before the oil is sent to clients as it can damage refining equipment.
