Russian Oil Exports Rebound to Reignite Doubts Over Output Cut, reveals a Yahoo news source.
Russia’s crude oil exports
Russia’s crude oil exports bounced back, with the previous week’s sharp decline proving short-lived.
Flows from Russian ports rose by 540,000 barrels a day, recovering a little less than half of the previous week’s loss and climbing back above 3 million barrels a day, according to tanker-tracking data compiled by Bloomberg. The less volatile four-week average also edged higher.
Moscow’s energy ministry said output was cut by 700,000 barrels a day in March and the previous week’s shipments were consistent with a lower production level. But the increase in flows last week casts doubt on the size of any output reduction, particularly as the increase came from ports in the west of the country, where the burden of cuts is expected to be felt. The only region where flows fell was the Pacific, from where voyages to Russia’s remaining customers are shortest and export prices are highest.
The diversion of crude previously delivered to Poland and Germany through the Druzhba pipeline has boosted seaborne flows during the early part of this year to an average of 3.32 million barrels a day, compared with 2.94 million barrels a day during the equivalent period at the end of 2022. Flows to Germany halted at the end of 2022 and deliveries to Poland were stopped in late February. Poland’s state-controlled oil refiner PKN Orlen SA has terminated its last contract with a Russian supplier in response to the halt in oil shipments via Druzhba.
Russia’s Lifelines
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 to 3.31 million barrels a day in the latest four-week period.
As the ultimate destinations of cargoes loading in late January became apparent, flows to China rose to new post-invasion highs, and remained close to those levels in February. Historical patterns suggest that most of the vessels currently identified as “Unknown Asia” destinations and heading for the Suez Canal will end up in India, while those loaded onto very large crude carriers off the north coast of Morocco or, more recently, in the Atlantic Ocean, will head to China.
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 60 cargoes have been transferred between ships in those two locations since the start of the year.
Russia has also resumed cargo transfer operations in the Atlantic Ocean, with the Aframax tanker Volans moving its cargo into the VLCC Scorpius north of the Cape Verde islands over the weekend.
Crude Flows by Destination
Crude flows in the week to April 14 rose by 540,000 barrels a day from the previous week, to 3.43 million barrels a day. On a four-week average basis, overall seaborne exports increased by 50,000 barrels a day to 3.39 million barrels a day.
Volatile 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.
Four-week average shipments to Russia’s Asian customers, plus those on vessels showing no final destination, edged higher, rising to within 40,000 barrels a day of the all-time high set in the period to March 31. Shipments rose to 3.15 million barrels a day in the period to April 14, compared with 3.1 million barrels a day previously.
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 726,000 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 396,000 barrels a day in the four weeks to April 14, are those on tankers showing a destination of Ceuta, Kalamata 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 were stable at 83,000 barrels a day in the 28 days to April 14, 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 April 14.
Exports to Turkey, Russia’s only remaining Mediterranean customer, were unchanged at 162,000 barrels a day in the four weeks to April 14.
Flows to Bulgaria, now Russia’s only Black Sea market for crude, remained stable at 83,000 barrels a day.
Flows by Export Location
Aggregate flows of Russian crude rebounded from an eight-week low in the seven days to April 14, rising back above 3 million barrels a day. Lower shipments from the Pacific were more than offset by increases from all other regions.
Figures exclude volumes from Ust-Luga and Novorossiysk identified as Kazakhstan’s KEBCO grade.
Export Revenue
Inflows to the Kremlin’s war chest from its crude-export duty rose by $7 million to $47 million in the seven days to April 14, while four-week average income edged higher to $46 million.
President Vladimir Putin has 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 are 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, is not affected by the change.
The duty rate for April was set at $1.95 a barrel, little changed from March, based on a Urals price of $50.80 a barrel during the assessment period that ran from Feb. 15 to March 14. The rate for May will be $1.96 a barrel, based on a Urals price of $51.15 a barrel between March 15 and April 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 31 tankers loaded 24 million barrels of Russian crude in the week to April 14, vessel-tracking data and port agent reports show. That’s up by 3.8 million barrels, or 19%, reversing less than half of the previous week’s slump. 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.
Baltic terminals
The total volume on ships loading Russian crude from Baltic terminals recovered to 1.56 million barrels a day.
Shipments from Novorossiysk in the Black Sea rose to a three-week high, with flows reaching 667,000 barrels a day.
Arctic shipments rebounded from the previous week’s slump, with two Suezmax and one Aframax tanker loading in the week to April 14.
Flows from the Pacific fell for a second week, with eight tankers loading at the region’s three export terminals in the week to April 14, down from 10 the previous week.
Three cargoes of ESPO crude out of just five loaded during the week are on vessels heading to China. One vessel is heading to India and the other is showing its destination as Singapore. Previous vessels heading there from Kozmino have eventually gone on to India.
The remaining volumes heading to unknown destinations are 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 also ending up in India.
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.
Did you subscribe to our daily Newsletter?
It’s Free! Click here to Subscribe!
Source: Yahoo News
