Russia’s Crude Shipments Rebound Even As Sanctions Snare Tankers

(Bloomberg) -- Russia’s seaborne crude exports clawed back about half of the previous week’s losses even though there’s growing evidence that sanctions are finally starting to stymie Moscow’s oil supply chain.

The rebound came after maintenance work ended at Russia’s most important Baltic export terminal and storms that had repeatedly hit its main Pacific port in recent weeks began to abate. Those earlier disruptions left four-week average flows slightly below Russia’s first-quarter export target, tanker-tracking data compiled by Bloomberg show.

Indian oil refiners — Moscow’s second-biggest customers after China since the 2022 invasion of Ukraine — will no longer accept tankers owned by state-run Sovcomflot PJSC because of the risks posed by recently intensified sanctions. That appears to have led to several vessels hauling Russian crude getting held up off the Asian nation’s coast, with others diverting to China.

None of the ships designated by the US Treasury as carrying oil in breach of a Group of Seven price cap has loaded a cargo since it was added to a list of sanctioned vessels. Many have diverted to the Black Sea, where they have disappeared from tracking screens. Others are anchored near ports on Russia’s Baltic and Pacific coasts.

Still, for now, overall crude flows have not been reduced on any significant scale, with shipments in the week to March 24 rising by about 360,000 barrels a day. With a shadow fleet of tankers willing to haul Russian oil numbering at least 600 vessels, there are still plenty of ships to keep the oil flowing.

The rebound in shipments has helped boost Moscow’s oil earnings. The gross value of crude exports recouped about half of the previous week’s drop, rising to $1.68 billion in the seven days to March 24 from $1.48 billion in the period to March 17. Four-week average income was also up, rising by about $15 million to $1.62 billion a week.

Most of the backlog of Russia’s Sokol crude that built up after being turned away by Indian refiners has now been discharged. About 8.4 million barrels have been delivered to plants in China, with some 3.5 million barrels eventually finding their way back to India. One cargo was delivered to Pakistan.

That leaves about 5.5 million barrels yet to discharge, about half of which is also heading back toward India. All of the Sokol cargoes loaded so far this month have headed directly to China.

Flows by Destination

Russia’s seaborne crude flows in the week to March 24 rose to 3.32 million barrels a day. However, the less volatile four-week average slipped for a second week, dropping by about 40,000 barrels a day to 3.24 million barrels a day.

Weekly shipments were about 260,000 barrels a day below the average seen in May and June, or about 40,000 barrels a day above Russia’s first quarter target that is part of the OPEC+ alliance’s broader effort to curb supplies and support prices. The four-week average was about the same amount below the target.

All figures exclude cargoes identified as Kazakhstan’s KEBCO grade. Those are shipments made by KazTransoil JSC that transit Russia for export through the Black Sea port of Novorossiysk and the Baltic’s Ust-Luga and are not subject to European Union sanctions or a price cap.

The Kazakh barrels are blended with crude of Russian origin to create a uniform export grade. Since Russia’s invasion of Ukraine, Kazakhstan has rebranded its cargoes to distinguish them from those shipped by Russian companies.

• Asia

Observed shipments to Russia’s Asian customers, including those showing no final destination, edged higher to 2.93 million barrels a day in the four weeks to March 24, up from a revised 2.86 million in the previous four-week period.

About 1.21 million barrels a day of crude was loaded onto tankers heading to China. The Asian nation’s seaborne imports are boosted by about 800,000 barrels a day of crude delivered from Russia by pipeline, either directly, or via Kazakhstan. 

Flows on ships signaling destinations in India averaged about 1.22 million barrels a day.

Both the Chinese and Indian figures will rise as the discharge ports become clear for vessels that are not currently showing final destinations.

The equivalent of about 385,000 barrels a day was on vessels signaling Port Said or Suez in Egypt, or are expected to be transferred from one ship to another off the South Korean port of Yeosu. Those voyages typically end at ports in India or China and show up in the chart below as “Unknown Asia” until a final destination becomes apparent. This figure includes stranded Sokol crude cargoes that are still waiting to discharge after failing to find homes in India since mid-December.

The “Other Unknown” volumes, running at about 80,000 barrels a day in the four weeks to March 24, are those on tankers showing no clear destination. Most of those cargoes originate from Russia’s western ports and go on to transit the Suez Canal, but some could end up in Turkey. Others could be moved from one vessel to another, with most such transfers now taking place in the Mediterranean, off the coast of Greece.

Europe and Turkey

Russia’s seaborne crude exports to European countries have ceased.

With flows to Bulgaria halted at the end of last year, Turkey is now the only short-haul market for shipments from Russia’s western ports.

Exports to Turkey slipped to about 290,000 barrels a day in the four weeks to March 24. That’s the lowest in six weeks and down from a revised 390,000 barrels a day in the period to March 17.

Vessel-tracking data are cross-checked against port agent reports as well as flows and ship movements reported by other information providers including Kpler and Vortexa Ltd.

Export Value

Following the abolition of export duty on Russian crude, we have begun to track the gross value of seaborne crude exports, using Argus Media price data and our own tanker tracking.

The gross value of Russia’s crude exports recouped about half of the previous week’s drop, rising to $1.68 billion in the seven days to March 24 from $1.48 billion in the period to March 17. Four-week average income was also up, rising by about $15 million to $1.62 billion a week. The four-week average is still well off its peak of $2.17 billion a week, reached in the period to June 19, 2022. The highest it reached last year was $2 billion a week in the period to Oct. 22.

During the first four weeks after the Group of Seven nations’ price cap on Russian crude exports came into effect in early December 2022, the value of seaborne flows fell to a low of $930 million a week, but soon recovered.

The chart above shows a gross value of Russia’s seaborne oil exports on a weekly and four-week average basis. The value is calculated by multiplying the average weekly crude price from Argus Media Group by the weekly export flow from each port. For shipments from the Baltic and Arctic ports we use the Urals FOB Primorsk dated, London close, midpoint price. For shipments from the Black Sea we use the Urals Med Aframax FOB Novorossiysk dated, London close, midpoint price. For Pacific shipments we use the ESPO blend FOB Kozmino prompt, Singapore close, midpoint price.

Export duty was abolished at the end of 2023 as part of Russia’s long-running tax reform plans.

Ships Leaving Russian Ports

The following table shows the number of ships leaving each export terminal.

A total of 31 tankers loaded 23.2 million barrels of Russian crude in the week to March 24, vessel-tracking data and port agent reports show. That was up by about 2.5 million barrels from the previous week. 

High winds at the start of the week may have hampered shipments from Russia’s Pacific terminal at Kozmino. Winds were gusting above 30 miles per hour on two of the first three days of the period, according to data from visualcrossing.com.

All figures exclude cargoes identified as Kazakhstan’s KEBCO grade. One cargo of KEBCO was loaded at Novorossiysk and one at Ust-Luga during the week.

NOTES

Note: This story forms part of a weekly series tracking shipments of crude from Russian export terminals and the gross value of those flows. Weeks run from Monday to Sunday. The next update will be on Tuesday, April 2.

Note: All figures exclude cargoes owned by Kazakhstan’s KazTransOil JSC, which transit Russia and are shipped from Novorossiysk and Ust-Luga as KEBCO grade crude.

If you are reading this story on the Bloomberg terminal, click here for a link to a PDF file of four-week average flows from Russia to key destinations.

--With assistance from Sherry Su.

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