- Across the world, there are increasing signs that the smooth flow of Russian petroleum is starting to get snarled.
- Tankers bounce between Chinese ports after loading Russian oil.
- However, cargoes are now starting to take longer to find homes.
As well as having implications for Moscow — proceeds from taxes on oil industry accounted for over two thirds of energy tax revenue in February — the development may alarm US officials, who’ve long argued that the Russian oil needs to flow freely to avoid a surge in fuel prices.
Bouncing Between Ports
Ships filled with refined fuels are floating off the coasts of Europe, Africa and Latin America, potentially ratcheting up waiting fees. Some vessels hauling the OPEC+ producer’s crude oil are bouncing between ports without discharging, while others are unloading and being stashed at unusual locations. It all points to a network of logistics that is struggling to keep pace with servicing a country that exports over 7 million barrels a day of crude oil and products. A vast swath of that trade has shifted from Europe to new and less-familiar customers, often thousands of miles further away.
“There has already been a mismatch in what is leaving Russian ports and what is imported by buyers of Russian oil,” said Giovanni Staunovo, commodity analyst at UBS Group AG. Though it announced an output cut of 500,000 barrels a day for this month, Russia’s crude oil exports by sea have held up so far this month — a fact that has weighed on prices in recent weeks. About 1.2 billion barrels of crude oil were on the water last week, the highest for this time of the year in data going back to 2016, data from Vortexa Ltd. showed.
Asia Still Hovering
“Willing buyers in Asia, namely India and, to a lesser extent, China, have snapped up discounted crude oil cargoes, but increasing volumes on the water suggest the share of Russian oil in their import mix may be getting too big for comfort,” the International Energy Agency said in its monthly report this week. With Asia still hoovering up lots of Russian supply, the country is nevertheless having to turn to increasingly unusual places to stash its crude.
A vessel loaded with Russian crude has been idling off the coast of Ghana for almost three weeks and another shipment was sent to the storage tanks in southeast Turkey late last month, the first to be shipped to Dortyol terminal since at least 2018 when Bloomberg started tracking the flows. “Although crude oil cargoes are finding new homes in China and India, products are facing increasing difficulties to be placed,” said Tamas Varga, an analyst at brokerage PVM.
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