Trade ministry data showed Brazil exported around 5.59mn t (1.37mn b/d) of oil in June, following a May surge that saw the dispatch of some 1.91mn b/d. China saw its share of receipts increase to around 88 percent in June from 67 percent in May, but its corresponding volume slipped to around 1.20mn b/d from 1.32mn b/d in May. A recovery in China's oil demand reverberates in Brazil because so much Brazilian crude flows to Chinese refiners.
China's appetite for light sweet pre-salt crude grades such as Lula has allowed Petrobras and other producers of deepwater deposits sidestep the worst of the market fallout in recent months. But congestion at Chinese ports and domestic logistical constraints in early July point to more limited flow so far this month.
After the pandemic initially sapped Chinese demand that has buoyed pre-salt output for years, producers in Brazil dispatched more crude to countries such as Malaysia, the Netherlands, Spain, India and Portugal in the first half of the year. China's share of export receipts in the first half of 2020 averaged around 58 percent, a 22 percent drop compared with the same period of 2019.
Brazilian crude production averaged around 2.755mn b/d in May, down by 6.5 percent from April and up a slight 1.36 percent on the year. Petrobras has suggested that its own crude exports could drop from a 1mn b/d record in April as it turns its focus to the export of higher margin refined products, namely low-sulfur marine fuel. The company is also increasing the production of motor fuels for the domestic market as demand rebounds on the recent easing of lockdown measures.
