A Little Higher In Asia; OPEC, Russian Crude Supply Outlook Receives A Lift

WTI and Brent are ~$0.40 better off apiece at writing, operating within tight ~$1.00 bands in limited Asia-Pac dealing.

• To recap, both benchmarks backed away from multi-month highs on Tuesday following WSJ source reports of some OPEC members considering the idea of suspending Russia from OPEC+ while preparing to increase output over the next few months. This has raised expectations from some quarters for prominent OPEC members Saudi Arabia and the UAE to pump more crude, with the duo recognised as possessing spare production capacity that can be quickly deployed.
• Libya’s Agoco has reported a 220K bpd loss in crude output from a leak on the Sarir-Tobruk pipeline, while Argus Media source reports have pointed to a narrowly-averted worker strike at the Es Sider terminal (estimated 300K bpd capacity).
• Looking to China, Shanghai’s COVID lockdown was (mostly) lifted today, although a recent BBG report has highlighted that Chinese authorities are continuing to invest in vast, seemingly permanent networks of testing infrastructure, suggesting the likelihood of the country’s COVID Zero strategy remaining in place for the long run.
• Elsewhere, a RTRS source report has pointed to Russian companies led by Rosneft planning to open recently shuttered oil wells in June, corroborating comments earlier in May from Russian Deputy PM Novak that the country would increase oil production during the same period, while increasing exports to Asia. A note that seaborne Russian crude has been on a steady rise, while crude shipments meant for Europe have so far been increasingly diverted to Asia, helping to reduce the impact of Western sanctions on Russian exports.