Russian Crude Flows Top 2023 Levels With Refineries Constrained

(Bloomberg) — Russia’s crude flows rebounded in the seven days to May 5, with additional vessels leaving the major ports of Kozmino on the Pacific coast and Murmansk on the Arctic. The four-week average also rose.

Buoyed by last week’s increase, crude shipments for the year so far are running ahead of the average for 2023, with domestic oil processing still under pressure as refineries that have barely recovered from Ukrainian drone strikes enter seasonal maintenance. Attacks on processing plants continue, and Russia plans to reduce daily diesel shipments from its key western ports in May to the lowest since at least 2021.

That’s likely to support crude flows, with Moscow continuing to shift the burden of supply management under commitments to the OPEC+ group onto production and away from exports. Its target for May is to hold exports 71,000 barrels a day below the average level for May-June 2023. That compares with a cut of 121,000 barrels a day for April.

The higher export volumes, together with rising oil prices and a weaker ruble combined to boost the Kremlin’s oil revenue. Proceeds for the Russian budget from oil-related taxes doubled in April from a year earlier, despite international sanctions intended to limit the flow of money to pay for President Vladimir Putin’s war in Ukraine.

Seaborne Crude | Russia’s seaborne crude shipments (2022-2024)

The first sanctioned Russian tanker to load crude after being listed is now heading through the Red Sea. The SCF Primorye, cited by the US in October for breaching a Group of Seven price cap, loaded Urals at Novorossiysk on the Black Sea in late April and is now showing a destination of Singapore. It is most likely en route for China, whose ports have been more willing than those elsewhere to handle vessels owned by sanctioned entities. If it is able to discharge its cargo without difficulty, it could pave the way for other sanctioned tankers owned by state controlled Sovcomflot PJSC to return to work.

Separately, a backlog of as many as 18 million barrels of Russia’s Sokol crude, shunned by Indian refiners in December, has cleared after being stranded on tankers for months. About 9.1 million barrels, half of the total, have been delivered to refineries in China. Another 7.7 million barrels eventually found their way back to India, or are now heading there. Two cargoes have been delivered to Pakistan.

Crude Shipments

A total of 33 tankers loaded 25.75 million barrels of Russian crude in the week to May 5, vessel-tracking data and port agent reports show. That was up by about 1.73 million barrels, from the previous week.

Tankers Loading Crude at Russian Terminals | 33 tankers loaded Russian crude in the week to May 5

Russia’s seaborne crude flows in the week to May 5 rose by about 250,000 barrels a day to 3.68 million from 3.43 million for the week to April 28. The less volatile four-week average was up by about 70,000 barrels a day at 3.65 million.

The increase was driven by an additional shipment from Kozmino on the Pacific coast and through the port of Murmansk on the Arctic.

Crude shipments so far this year are running about 25,000 barrels a day higher than the average for 2023.

Russia’s Seaborne Crude | Four-week average crude shipments from Russia by destination (2022-2024)

Weekly shipments were about 170,000 barrels a day above Russia’s May target, which is part of the OPEC+ alliance’s broader effort to curb supplies and support prices. The four-week average was about 180,000 barrels a day above a separate target, which was calculated as the weighted average of those for April and May.

Russia said it would cut crude exports during April by 121,000 barrels a day from their average May-June level, while May shipments would be 71,000 barrels a day below the same starting point. The move is part of the wider OPEC+ initiative, with Moscow shifting more of the burden onto production targets, which are preferred by other members of the group. Seaborne shipments in the first three months of the year exceeded Russia’s target level for that period by just 16,000 barrels a day.

Crude Shipments | Russian crude shipments in million barrels a day

One cargo of Kazakhstan’s KEBCO was loaded at Ust-Luga and one at Novorossiysk during the week.

Flows by Destination

Asia

Observed shipments to Russia’s Asian customers, including those showing no final destination, edged higher to 3.32 million barrels a day in the four weeks to May 5, from 3.27 million in the previous four-week period.

Russia’s Asian Customers | Four-week moving average of crude shipments from all Russian ports (2022-2024)

About 1.15 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 1.63 million barrels a day.

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 430,000 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 May 5, 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 most such transfers now taking place in the Mediterranean, or more recently off Sohar in Oman.

Crude Shipments to Asia | Shipments of Russian crude to Asian buyers in million barrels a day

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, with flows in the four weeks to May 5 rising to 335,000 barrels a day.

Russia’s Crude Shipments to Europe and Turkey | Four-week average crude shipments from Russia (2022-2024)

Export Value

The gross value of Russia’s crude exports rose to $1.85 billion in the seven days to May 5 from about $1.8 billion in the period to April 28. Four-week average income was also up, edging higher by about $7 million to $1.92 billion a week, despite a dip in oil prices. The four-week average is still below its peak of $2.17 billion a week, 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.

Value of Exports | Gross income from seaborne crude exports (2022-2024)

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, May 14.

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 here or 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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