Four-week average shipments fall below February average with lower volumes from western ports
(Bloomberg) — Flows of Russian crude are starting to show signs of falling, more than four months after the country was due to slash production.
Crude shipments through Russia’s western ports in the four weeks to July 9 dropped substantially below their average February level for the first time, after volumes surged during the intervening months, according to vessel tracking data monitored by Bloomberg and corroborated by other data sources.Nationwide seaborne crude flows fell to 2.86 million barrels a day in the week to July 9. That was a little more than 1 million barrels a day lower than the previous week, with 80% of the drop coming from ports in western Russia. Moscow has said previously that lower flows resulting from its output cut would be targeted at ports on the Baltic and Black Sea. There was no obvious sign of maintenance at Russian ports like that which led to the big drop seen two weeks ago.
With few buyers left in Europe, the impact of the lower flows is being felt in shipments to Asia, which dropped to their lowest since mid-January. The smaller volumes undermined the Kremlin’s income from export taxes, which fell by 29% last week compared with the one before.
The reduction comes after Russia followed Saudi Arabia in announcing further curbs earlier this month. The desert kingdom said it would extend its unilateral output cut through August, while Moscow pledged to reduce exports by 500,000 barrels a day. Saudi Energy Minister Prince Abdulaziz bin Salman called Russia’s move meaningful because it applies to oil exports, which can be measured more effectively than production.
Russia initially said in February that it would cut oil production by 500,000 barrels a day in retaliation for Western sanctions and price caps on its oil. The Kremlin’s decision to stop disclosing production data and a lack of clear evidence that the cut was being implemented led Saudi Arabia — Russia’s co-leader of the OPEC+ producers’ group — to suggest that Moscow would benefit from being more transparent.
Meanwhile, Russia’s refineries raised their crude-processing rate in first days of July to the highest in 12 weeks amid robust demand for their fuel abroad and looming cuts in domestic downstream subsidies.
Figures from Russia’s Energy Ministry on crude production show that the nation failed to fully implement its pledged output cuts in June. Crude output averaged 9.599 million barrels a day, only 350,000 barrels a day lower than in February.
Crude Flows by Destination
On a four-week average basis, overall seaborne exports in the period to July 9 were down by 205,000 barrels a day to 3.21 million barrels a day. This compares with an average of 3.38 million barrels a day in the four weeks to Feb. 26. More volatile weekly flows plunged by about 1.04 million barrels a day to 2.86 million barrels a day.
Weekly data are affected by the scheduling of tankers and loading delays caused by bad weather. Port maintenance can also disrupt exports for several days at a time.
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.
-
Asia
Four-week average shipments to Russia’s Asian customers, plus those on vessels showing no final destination, fell to 2.93 million barrels a day in the period to July 9 from 3.13 million barrels a day in the four weeks to July 2. That’s the lowest since mid-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 1.85 million barrels a day in the four weeks to July 9. That’s down from a high of 2.2 million barrels a day in the four weeks to May 21.
The equivalent of 363,000 barrels a day was on vessels showing destinations as either 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 268,000 barrels a day in the four weeks to July 9, 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, while other cargoes are transferred from one vessel to another, either in the Mediterranean or, more recently, in the Atlantic Ocean.
-
Europe
Russia’s seaborne crude exports to European countries were unchanged at 104,000 barrels a day in the 28 days to July 9, 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 July 9.
Exports to Turkey, Russia’s only remaining Mediterranean customer, were unchanged at 177,000 barrels a day in the four weeks to July 9, their lowest four-week average level since May; 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, were unchanged at 104,000 barrels a day.
Flows by Export Location
Aggregate flows of Russian crude slumped to 2.86 million barrels a day in the seven days to July 9, from 3.90 million barrels a day the previous week. Shipments fell from all four export regions, with the biggest drops seen at Baltic and Arctic ports.
Shipments from Primorsk dropped by 313,000 barrels a day, or 21%, from the previous week. Flows from Murmansk were down week-on-week by 286,000 barrels a day, but are expected to rebound in the current week, with two Suezmax tankers currently at the port.
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 other data providers including Kpler SAS and Vortexa Ltd.
Export Revenue
Inflows to the Kremlin’s war chest from its crude-export duty slumped to $43 million in the seven days to July 9, a drop of $17 million or 29%. Four-week average income fell by $4 million to $49 million.
President Vladimir Putin ordered his government to fine-tune existing indicators and establish additional ones to calculate oil prices for tax purposes in order to reduce the discount to global crude prices. Russia’s government calculates oil taxes 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. From July the discount is currently set at $25/bbl, though this may now be narrowed.
The duty rate for July has been set at $2.13 a barrel, based on an average Urals price of $54.57, which was $20.89 a barrel below Brent during the period between May 15 and June 14.
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 27 tankers loaded 20.01 million barrels of Russian crude in the week to July 9, vessel-tracking data and port agent reports show. That’s down by 7.26 million barrels from the previous week’s figure, reversing more than three-quarters of the gain seen in the period to July 2. 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 fell back to 1.15 million barrels a day, giving up three-quarters of the gain seen the previous week. The decline was concentrated at Primorsk, with flows from Ust-Luga rising week-on-week.
Shipments of Russian crude from Novorossiysk in the Black Sea dropped to a seven-week low of 480,000 barrels a day. One cargo of Kazakhstani crude was also loaded at the port during the week.
Arctic shipments fell sharply, dropping back to 143,000 barrels a day. Three Suezmax tankers arrived the port near the end of the week to July 9, but only one of them completed loading before the week ended.
Eleven tankers loaded at Russia’s three Pacific export terminals, down from 13 the previous week. The volume of crude shipped from the region fell to 1.09 million barrels a day, giving up a little over one-third of the previous week’s gain.
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, where it remains.
One half-cargo was loaded from the Sakhalin Island terminal in the week to July 9, with the other half loaded the previous week and the vessel spending several days at anchor between the two loading operations. Maintenance at one of the Sakhalin 2 project’s oil production platforms has reduced the volume of crude available for shipping.
NOTES
Note: This story forms part of a regular weekly series tracking shipments of crude from Russian export terminals and the export duty revenues earned from them by the Russian government.
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.
Note: The next update will be published on Tuesday July 18, with future updates also to be published on Tuesdays.
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.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.