Russia’s Crude Shipments Drop by the Most Since Ukraine Invasion
(Bloomberg) -- Russia’s weekly crude exports crashed by the most since before the 2022 invasion of Ukraine in the seven days to July 7, with the less volatile four-week average falling to the lowest since February.
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There was no clear cause for the slump in shipments. There were no gaps in loading programs to suggest maintenance work and no reports of storms affecting the berthing or loading of vessels. But shipments were down week-on-week from the Baltic, the Black Sea and the Pacific.
Russia’s improving compliance with an OPEC+ output target may be reducing crude available for export. Using Moscow’s conversion factor of 7.18 barrels per ton, production fell by about 360,000 barrels a day between March and June. A recovery in refinery runs may also have cut shipments. Data for the first few days of July put processing at the highest since December, with completion of seasonal maintenance and repairs after Ukrainian attacks.
Rosneft PJSC and Lukoil PJSC, Russia’s biggest crude exporters, plan to cut their combined shipments from Novorossiysk by about 200,000 barrels a day this month from the June level, according to Bloomberg calculations, after resuming refinery operations at their Tuapse and Norsi plants.
The gross value of Russia’s crude shipments also fell in the seven days to July 7, but the drop was cushioned by a fourth straight week-on-week increase in oil prices.
Separately, vessels targeted by Western authorities that Moscow relies on to transport its oil are mostly remaining idle after being sanctioned. While three of the 21 ships owned by Russia’s state-controlled Sovcomflot PJSC have taken on cargoes and subsequently disappeared from automated tracking systems, others remain inactive.
All three crude tankers sanctioned by the UK on June 13 remain anchored off the Ust-Luga oil terminal, despite earlier featuring in loading programs for Russia’s Baltic ports. It is unclear whether they will actually take on cargoes, though, with all now having disappeared from partial line-ups seen by Bloomberg. Similarly, none of the crude carriers sanctioned by the European Union has loaded a cargo since the directive was published on June 25.
Crude Shipments
A total of 25 tankers loaded 18.7 million barrels of Russian crude in the week to July 7, vessel-tracking data and port agent reports show. That was a sharp drop from 25.66 million barrels the previous week.
Russia’s seaborne crude flows in the week to July 7 slumped by about 990,000 barrels a day to 2.67 million, its lowest since the final week of January, when storms slashed shipments from the Pacific port of Kozmino. The less volatile four-week average was also down, falling by about 215,000 barrels a day to a 20-week low of 3.27 million.
Shipments were lower from almost all of Russia’s crude export terminals. The only exceptions were Murmansk, where exports remained muted at just one vessel, and the Sakhalin Island terminal of Prigorodnoye, which saw no shipments for a second week.
After last week’s slump, crude shipments so far this year are virtually unchanged from the average for the whole of 2023.
Russia terminated its export targets at the end of May, opting instead to restrict production, in line with its partners in the OPEC+ oil producers’ group. The country’s output target is set at 8.978 million barrels a day until the end of September, after which it is scheduled to rise at a rate of 39,000 barrels a day each month until September 2025, as long as market conditions allow.
Two cargoes of Kazakhstan’s KEBCO were loaded at Ust-Luga and one at Novorossiysk during the week.
Flows by Destination
Asia
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Observed shipments to Russia’s Asian customers, including those showing no final destination, fell to a three-and-a-half-month low of 2.9 million barrels a day in the four weeks to July 7.
About 900,000 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 1.75 million barrels a day, down from the revised figure of 1.78 million for the period to June 30.
Both the Chinese and Indian figures are likely to rise as the discharge ports become clear for vessels that are not currently showing final destinations.
The equivalent of about 170,000 barrels a day was on vessels signaling Port Said or Suez in Egypt. Those voyages typically end at ports in India or China and show up as “Unknown Asia” until a final destination becomes apparent.
The “Other Unknown” volumes, running at about 80,000 barrels a day in the four weeks to July 7, are those on tankers showing no clear destination. Most originate from Russia’s western ports and go on to transit the Suez Canal, but some could end up in Turkey. Others may be moved from one vessel to another, with the majority of such transfers now taking place in the Mediterranean, most recently off Morocco, or near Sohar in Oman.
Russia’s oil flows continue to be complicated by the Greek navy carrying out exercises in an area that’s become associated with the transfer of the nation’s crude. These activities have now been extended to July 15.
Europe and Turkey
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Russia’s seaborne crude exports to European countries have ceased, with flows to Bulgaria halted at the end of last year. Moscow also lost about 500,000 barrels a day of pipeline exports to Poland and Germany at the start of 2023, when those countries stopped purchases.
Turkey is now the only short-haul market for shipments from Russia’s western ports, with flows in the 28 days to July 7 edging lower to about 365,000 barrels a day.
Export Value
The gross value of Russia’s crude exports slumped to $1.44 billion in the seven days to July 7 from about $1.92 billion in the period to June 30. The big drop in flows was partly offset by the fourth straight week-on-week increases in prices for Russia’s major crude streams to lessen the drop in revenues. Even so, weekly gross revenue was still the lowest since the final week of January.
Export values at Baltic ports were up week-on-week by more than $2 a barrel, while key Pacific grade ESPO rose by about $1.90 a barrel. The price of crude shipped from Novorossiysk rose by $2.25 a barrel. Delivered prices in India also increased, up by about $1.75 a barrel, all according to numbers from Argus Media.
Four-week average income was also down, falling by about $50 million to $1.67 billion a week. The four-week average peak of $2.17 billion a week was reached in the period to June 19, 2022.
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.
NOTES
This story forms part of a weekly series tracking shipments of crude from Russian export terminals and the gross value of those flows. The next update will be on Tuesday, July 16.
All figures exclude cargoes identified as Kazakhstan’s KEBCO grade. Those are shipments made by KazTransoil JSC that transit Russia for export through Novorossiysk and 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 stream. Since Russia’s invasion of Ukraine, Kazakhstan has rebranded its cargoes to distinguish them from those shipped by Russian companies.
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.If you are reading this story on the Bloomberg terminal, click 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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