In the seven days to March 10, Russia’s shipments recovered 40% of the previous weeks’ loss, rising to 3.33 million barrels a day. The less-volatile four-week average also rose.
There has been no obvious decline in Russia’s seaborne exports since its troops invaded Ukraine more than a year ago, though there may have been an overall drop in flows because tankers have taken on some crude previously sent to Europe through the Druzhba pipeline. As yet, there’s no sign of flows being impacted by the 500,000-barrels-a-day output cut that Russia said it would impose in March.
India overtook China as the biggest buyer of Russian seaborne crude in early November and has continued to buy more than its neighbor ever since. Increasing quantities of the Pacific ESPO crude grade are heading to India’s ports, after months in which Chinese refiners had snapped up almost every available shipment.
India will not breach Western sanctions on Russia — including the price cap of $60 a barrel imposed on purchases of oil from Moscow — according to people familiar with the matter, who said the authorities have asked banks and traders to adhere to the rules.
The combined volume of crude on vessels heading to China and India plus smaller flows to Turkey and quantities on ships that haven’t yet shown a final destination rebounded in the latest four-week period, to an average 3.28 million barrels a day, setting a new high.
As the ultimate destinations of cargoes loading in late January and early February become apparent, flows to China rose to new post-invasion highs. Historical patterns suggest that most of the cargoes currently identified as “Unknown Asia” and heading for the Suez Canal will end up in India.
Ship-to-ship transfers of cargoes in the Mediterranean continue apace. This has been most visible off the Spanish north African city of Ceuta and off the Greek coast near Kalamata. At least 46 cargoes have been transferred between ships in those two locations since the start of the year. The volume transferred off the coast of Greece, mostly in the Bay of Lakonikos, soared in February, rising to more than 10 million barrels, equivalent to 360,000 barrels a day. That compares with 4.4 million barrels, equivalent to 156,000 barrels a day transferred off Ceuta.
A tanker carrying a cargo of Russian crude remains anchored off the Ghanaian port of Tema more than two weeks after it arrived at the west African country. The National Petroleum Authority granted a delivery period for the cargo to be unloaded, but national security considerations have held up the process, according to people familiar with the matter.
Crude flows by destination
Crude flows in the week to March 10 rose by 220,000 barrels a day from the previous week. On a four-week average basis, overall seaborne exports gained 116,000 barrels a day to 3.41 million barrels a day.
All figures exclude cargoes identified as Kazakhstan’s KEBCO grade. Those are shipments made by KazTransoil JSC that transit Russia for export through the Baltic ports of Ust-Luga and Novorossiysk.
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. Transit crude is specifically exempted from European Union sanctions.
Four-week average shipments to Russia’s Asian customers, plus those on vessels showing no final destination rose to a new high of 3.19 million barrels a day in the period to March 10, up from 3.1 million barrels a day in the period to March 3.
While the volumes heading to China and India appear to have declined, history shows that most of the cargoes on ships without an initial destination eventually end up in one or other of those countries.
The equivalent of 682,000 barrels a day was on vessels showing destinations as either Port Said or Suez in Egypt, or which have already been 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 and show up in the chart below as “Unknown Asia” until a final destination becomes apparent.
The “Other Unknown” volumes, running at 558,000 barrels a day in the four weeks to March 10, are those on tankers showing a destination of Gibraltar, Malta or no destination at all. Most of those cargoes go on to transit the Suez Canal, but some could end up in Turkey. An increasing number are being transferred from one vessel to another in the Mediterranean for onward journeys to Asia.
Russia’s seaborne crude exports to European countries remained steady at 83,000 barrels a day in the 28 days to March 10, with Bulgaria the sole destination. These figures do not include shipments to Turkey.
A market that consumed more than 1.5 million barrels a day of short-haul crude, coming from export terminals in the Baltic, Black Sea and Arctic has been lost almost completely, to be replaced by long-haul destinations in Asia that are much more costly and time-consuming to serve.
No Russian crude was shipped to northern European countries in the four weeks to March 10.
Exports to Turkey, Russia’s only remaining Mediterranean customer, rose to 141,000 barrels a day in the four weeks to March 10. Flows there are little more than one-third of the highs they reached in September and October.
Despite not being a part of European sanctions on Russian crude exports, Turkey has become much less significant as a lifeline for Moscow since the EU import ban came into effect on Dec. 5. The Star refinery near Aliaga, owned by Azerbaijan’s Socar, is cutting down purchases of Russian crude, with flows to the plant averaging about 50,000 barrels a day in January and February, compared with an average of about 180,000 barrels a day from August to October.
Flows to Bulgaria, now Russia’s only Black Sea market for crude, were stable. Despite Bulgaria securing a partial exemption from the EU’s import ban, Lukoil PJSC appears to be starting to use non-Russian crude in its refinery.
Flows by export location
Aggregate flows of Russian crude rose to 3.33 million barrels a day in the week to March 10. A drop in exports from Baltic and Arctic terminals was more than offset by increases in flows from the Black Sea and the Pacific.
Figures exclude volumes from Ust-Luga and Novorossiysk identified as Kazakhstan’s KEBCO grade.
Inflows to the Kremlin’s war chest from its crude-export duty rose by $5 million to $45 million in the seven days to March 10, while four-week average income rose by $2 million to $43 million.
President Vladimir Putin signed into law amendments to the way Russia’s oil price is assessed for tax purposes. From April, rates of mineral extraction tax and profit-based tax on oil companies will be calculated using a decreasing discount to prevailing Brent prices, rather than assessments of Urals crude. Export duty, which will be phased out at the end of 2023, will not be affected by the change.
The duty rate for March has been set at $1.94 a barrel, the first increase since December, and is based on a Urals price of $50.51 a barrel during the assessment period that ran from Jan. 15 to Feb. 14.
The following charts show the number of ships leaving each export terminal and the destinations of crude cargoes from the four export regions.
A total of 31 tankers loaded 23.3 million barrels of Russian crude in the week to March 10, vessel-tracking data and port agent reports show. That’s up by 1.5 million barrels, or 7%, from the previous week. Destinations are based on where vessels signal they are heading at the time of writing, and some will almost certainly change as voyages progress. All figures exclude cargoes identified as Kazakhstan’s KEBCO grade.
The total volume on ships loading Russian crude from Baltic terminals fell for the first time in five weeks, dropping to 1.36 million barrels a day.
Shipments from Novorossiysk in the Black Sea jumped to a three-month high of 688,000 barrels a day.
Arctic shipments slumped to a four-week low, with one Suezmax tanker loading in the week to March 10.
Flows from the Pacific recovered half of the the previous week’s loss. Eleven tankers loaded at the region’s three export terminals in the week to March 10, up from eight the previous week.
An increasing volume of ESPO crude is heading to India, with four out of 11 cargoes loading so far this month, compared with two out of a total 30 shipments in February.
The volumes heading to unknown destinations are all Sokol cargoes that have recently been transferred to other vessels at Yeosu, or are currently being shuttled to an area off the South Korean port from the loading terminal at De Kastri.