According to Commerzbank analyst Carsten Fritsch, Kazakhstan’s oil production reached a record high recently

    by VT Markets
    /
    Apr 4, 2025

    Kazakhstan’s oil production reached a record high in March, increasing to 1.88 million barrels per day, surpassing the earlier figure of 1.43 million barrels per day. This rise moves further away from the previously agreed production limits, with a decline in oil supply anticipated for April.

    Russian authorities have suspended operations at two berths of an export terminal on the Black Sea vital for Kazakh oil loading, due to damage from a Ukrainian drone attack. If this closure persists, oil exports may drop by more than half according to trading sources.

    Kazakhstan’s Output Change

    Kazakhstan’s bump in output, now touching 1.88 million barrels per day, clearly deviates from its earlier commitment of 1.43 million. This jump isn’t just a number; it’s a tangible shift that increases regional supply at a time when others in the producer alliance are attempting to maintain tighter controls on volume. For now though, the gain appears short-lived—what comes up sharply often steps down almost as quickly, and a reduction is already being baked into short-term expectations for April.

    On the Russian side, we’re now dealing with an unplanned disruption—two berths at a key Black Sea terminal damaged, operations suspended. The drone attack has effectively put a hold on a vital loading point for Kazakh crude. The terminal in question is a critical part of the route for CPC blend exports, and current estimates suggest that if the outage stretches, movement of barrels through this path could shrink drastically—more than half potentially frozen.

    Now, we should be treating the Kazakh spike in March against the very real possibility of softening flow soon after. That distorted rise is not sustainable, and prices in the derivative markets will likely begin to account for that expected narrowing. It’s essential to be cautious in pricing structure that leans heavily on steady output from a corridor currently under physical and geopolitical strain.

    Russian Infrastructure Challenges

    Russia isn’t new to these challenges, but the proximity of physical infrastructure to zones of conflict introduces unpredictability. What does this mean practically? Volatility isn’t theoretical here. We’re looking at a set-up where regional supply isn’t just a function of capacity but also physical access. That’s why contract holders with exposure to CPC or Brent spreads might find margins compressed quickly if the outage extends past this week.

    We need to examine short-term positions with a more reactive posture—adjusting to shifts in flows faster than we typically would. What’s happening along the Black Sea is adding a fresh element to near-term supply data, and even if Kazakh volumes remain technically high on paper, their ability to exit the region is doubtful under present conditions.

    Herman, who has closely tracked CPC throughput, noted last week that physical constraints often take a few days to reflect meaningfully in prompt spreads—but when they do, the reaction tends to be sharp. So for now, prompt markets may act sluggishly, but if loading issues extend into next week, we should expect wider differentials and a steepening of the curve on the front end.

    There’s also the external perception—that of compliance. When production rises aggressively against a backdrop of agreed supply cuts, like we saw in Kazakhstan, it sends mixed messages to broader market participants. Mistrust in adherence could weigh on broader sentiment tied to group coordination.

    From our side, keeping an eye on shipping analytics and choke points feels more urgent than monitoring weekly production figures, at least over the next few settlement cycles. Trading strategy probably leans on second-month contracts and wider spread plays until physical route clarity returns.

    Create your live VT Markets account and start trading now.

    see more

    Back To Top
    Chatbots