Russian oil refineries have ramped up their crude-processing rates in early August, anticipating a significant cut to state subsidies that is on the horizon.

Between August 1 and 16, daily primary processing rates averaged 5.63 million barrels, marking an increase of almost 10,000 barrels per day compared to the average for most of July. This surge in activity occurred despite Rosneft's PJSC Saratov refinery undergoing planned maintenance during the same period.

Contributing to this rise in processing rates, Gazprom PJSC's Surgut condensate-processing plant concluded its maintenance work, and Surgutneftegas PJSC's Kirishi facility increased its throughput compared to July. Independent oil analyst Mikhail Turukalov also noted slight throughput increases at Gazprom Neft's Omsk refinery and TAIF-NK.

The movement of crude oil within Russia's domestic refineries and its international supply is a crucial indicator for oil market observers tracking the country's production trends, especially after official data was restricted due to Western sanctions.

Russia committed to a 500,000-barrel-per-day reduction in output from February levels, with this curtailment set to continue until 2024. While full adherence to this pledge was initially questioned, the International Energy Agency confirmed that Russia surpassed its commitment last month.

However, uncertainties persist. Turukalov remarked, "It's difficult to assess whether the monthly growth in refinery throughput will continue throughout August." He highlighted planned maintenance at Rosneft's Angarsk refinery starting on August 15 and the potential commencement of maintenance at the Ryazan refinery on August 20, which could lead to lower processing rates in August compared to July.

The looming reduction in subsidies for domestic gasoline and diesel supplies, set to be halved by the government in August, is motivating Russian refineries to process more crude in order to offset the subsidy reduction.