Shipments stable at 3 million barrels a day in the four weeks to Aug. 6
(Bloomberg) — Russia’s seaborne crude flows stabilized in the four weeks to Aug. 6, before Ukrainian naval drones attacked two Russian ships in the Black Sea — a move that could prompt Moscow to divert cargoes.
Average shipments during the period steadied at 3.02 million barrels a day, about 870,000 barrels a day below the peak in mid-May, tanker-tracking data compiled by Bloomberg show. More volatile weekly numbers slipped, with no cargoes leaving from the Arctic port of Murmansk after the previous week’s record-equaling flow.
The figures support the notion that Moscow is now honoring a pledge to keep supply off the global market alongside its allies in the OPEC+ producer coalition. Russia initially said it would cut oil production in retaliation for Western sanctions and price caps on its oil imposed after the invasion of Ukraine, using February as a baseline. But seaborne flows had continued to rise, dropping significantly only in the last few weeks.
The drone attacks targeted a Ropucha-class large landing vessel off the port of Novorossiysk and a Russian-flagged oil tanker that Ukraine said had been en route to deliver fuel to Russian forces in Crimea’s Kerch Strait. The incidents briefly halted activity at Novorossiysk.
By Monday the attack — and a warning from Kyiv that more could follow — had little impact on insurance costs for oil and commodity carriers in the key Black Sea region, as rates were already unusually high. Vessels waiting to load crude at Novorossiysk or the nearby CPC terminal were doing so much further south than they would normally, although none had turned away from the port.
Weekly data are affected by the scheduling of tankers and loading delays caused by bad weather. Port and pipeline maintenance can also disrupt exports for several days at a time. Four-week average shipments, which smooth out some of the volatility in the weekly numbers, edged up by 36,000 barrels a day. In contrast, weekly shipments dropped by 279,000 barrels a day to 3 million barrels a day.
Moscow’s initial pledge to cut production by 500,000 barrels a day in March had no immediate effect on exports. Flows from western ports actually rose, peaking in late May. The subsequent reduction came after fellow OPEC+ oil producer Saudi Arabia made and then extended its own unilateral output cut, putting pressure on Russia to implement its own reduction.
Moscow eventually followed through on its pledge to cut shipments from western ports, with flows from the region now down by about 290,000 barrels a day from their average February level. That month was the baseline for Russia’s output cut. Flows from the Baltic and Black Sea edged higher in the four weeks to Aug. 6 — the first increase in nine weeks.Russia will extend its export cut into September, Deputy Prime Minister Alexander Novak said last week, following a similar announcement from Saudi Arabia. However, the size of the supply reduction will be tapered to 300,000 barrels a day, from 500,000 barrels a day in August. Russia has given no baseline from which the export cut is to be measured.
Crude Flows by Destination
Russia’s seaborne crude flows are now at a lower level than they’ve been for most of this year. It was only in the second half of June that shipments began to fall significantly.
With few buyers left in Europe, the impact is being felt in shipments to Asia. On a four-week average basis, overall seaborne exports to Asian countries — plus the volumes on ships showing no final destination — are now about 870,000 barrels a day below their peak in mid-May. That’s despite a small uptick of about 40,000 barrels a day in the most recent period.
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 port of Ust-Luga and Novorossiysk on the Black Sea.
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.
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Asia
Observed shipments to Russia’s Asian customers, including those showing no final destination, edged up to 2.73 million barrels a day in the four weeks to Aug. 6, from a revised 2.69 million barrels a day in the period to July 30, which was the lowest since January.
Most of the cargoes on ships without an initial destination eventually end up in India. Even so, the volumes heading to the country that has become the biggest buyer of Russia’s seaborne crude are down from their recent highs. Adding the “Unknown Asia” and “Other Unknown” volumes to the total for India gives a figure of 1.77 million barrels a day in the four weeks to Aug. 6, from a high of 2.2 million barrels a day in the period to May 21.
The equivalent of 492,000 barrels a day was on vessels signaling Port Said or Suez in Egypt, or which already have 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 or China and show up in the chart below as “Unknown Asia” until a final destination becomes apparent.
The “Other Unknown” volumes, running at 285,000 barrels a day in the four weeks to Aug. 6, 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 transferred from one vessel to another, either in the Mediterranean or, more recently, in the Atlantic Ocean.
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Europe
Russia’s seaborne crude exports to European countries edged up to 146,000 barrels a day in the 28 days to Aug. 6, with Bulgaria the sole destination. These figures do not include shipments to Turkey.
A market that consumed about 1.5 million barrels a day of short-haul seaborne 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 Aug. 6
Exports to Turkey, Russia’s only remaining Mediterranean customer, slipped to about 140,000 barrels a day in the four weeks to Aug. 6, their lowest since April. Flows to the country had topped 425,000 barrels a day in October.
Flows to Bulgaria, now Russia’s only Black Sea market for crude, rose to 146,000 barrels a day, equaling their highest since January. The increase comes even as the country’s parliament voted to terminate Lukoil PJSC’s 35-year lease of a terminal serving the Russian company’s refinery near the coast.
Flows by Export Location
Aggregate flows of Russian crude slipped to 3 million barrels a day in the seven days to Aug. 6, from 3.28 million barrels a day the previous week. The drop came entirely from the Arctic, with a slump to zero partly offset by higher flows from the Baltic, Black Sea and Pacific.
Figures exclude volumes from Ust-Luga and Novorossiysk identified as Kazakhstan’s KEBCO grade.
Vessel-tracking data are cross-checked against port agent reports as well as flows and ship movements reported by other information providers including Kpler SAS and Vortexa Ltd.
Export Revenue
Inflows to the Kremlin’s war chest from its crude-export duty slipped to $48 million in the seven days to Aug. 6, a decrease of $1 million or 2%. Four-week average income moved in the opposite direction, rising to almost $46 million.
Russia’s government calculates oil taxes — including export duty — using a discount to Brent, which sets the floor price for the nation’s crude for budget purposes. If Russian oil trades above that threshold, the Finance Ministry uses the market price for tax calculations, as has been the case in recent months. The discount is set at $25 a barrel for July and August, but President Vladimir Putin signed amendments to the tax code that will narrow it to $20 a barrel from September to calculate taxes including export duty.
The duty rate for August has been set at $2.31 a barrel, based on an average Urals price of $58.03 during the calculation period between June 15 and July 14. That was $18.02 a barrel below Brent during the same dates.
Origin-to-Location Flows
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 30 tankers loaded 21.01 million barrels of Russian crude in the week to Aug. 6, vessel-tracking data and port agent reports show. That’s down by 1.95 million barrels from the previous week’s figure.
Shipments from the Arctic port of Murmansk dropped to zero from a record-equaling 571,000 barrels a day the previous week. But two tankers were loading cargoes as the week ended, so there will be a bounce in the amount exported from the port in the coming week.
Shipments from all other regions rose on a weekly basis.
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 the Baltic terminals continued to recover, rising to equal its highest level since the start of July. No cargoes of Kazakhstani crude were loaded at Ust-Luga during the week. Shipments from the Baltic are down by about 520,000 barrels a day from the highs seen between April and June.
Shipments of Russian crude from Novorossiysk in the Black Sea also continued to recover before the Ukrainian drone strike on a Russian naval vessel near the port. As in the Baltic, flows rose to equal their highest level since the start of July.
One cargo of Kazakhstani crude was also loaded at the port during the week.
Arctic shipments slumped to zero in the week to Aug. 6, dropping from a record equaling high the previous week. The slump is most likely the result of cargo scheduling with one Suezmax and one Aframax tanker taking on cargoes as the week ended.
Thirteen tankers loaded at Russia’s three Pacific export terminals, up from 12 the previous week. The volume of crude shipped from the region rose to 1.21 million barrels a day.
The total includes one vessel, the Alita I, that loaded at Kozmino while sending false tracking signals indicating that it was at Niigata in Japan, a process known as spoofing.
Shipments from the Sakhalin Island terminal remained low last week, due to maintenance at one of the Sakhalin 2 project’s oil production platforms. The work is set to run until September. One vessel loaded two part cargoes of Sakhalin Blend crude from the terminal.
The volumes heading to unknown destinations are mostly Sokol cargoes that recently have 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. Most of these are ending up in India.
Some Sokol cargoes are now being transferred a second time in the waters off southern Malaysia. A small number of ESPO shipments are also being moved from one vessel to another in the same area. All bar one of these cargoes have, so far, gone on to India. That one cargo was transferred onto a floating storage vessel off Malaysia. It was then transferred onto another tanker, which is now showing a destination in China, though the vessel remains anchored off Johor, to the east of Singapore.
Shipments of flagship Sokol crude to India have picked up again after slumping to zero in June. Shipments in July averaged about 140,000 barrels a day.
NOTES
Note: This story forms part of a weekly series tracking shipments of crude from Russian export terminals and the export duty revenues earned from them by the Russian government. It will not be published next week; the next update will be on Tuesday, Aug. 22.
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.
Note: Weeks have been revised to run from Monday to Sunday, rather than Saturday to Friday. This change has been implemented throughout the data series and previous weeks’ figures have been revised.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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