Russia’s Diving Oil Exports Show That Output Has Been Reduced

Russia’s plans for reducing oil production are becoming more real, as Russia’s seaborne shipments collapsed last week.

The biggest weekly drop since the storms that ravaged two Russian export ports in December saw flows from Russian ports fall by 1.24million barrels per day. According to data from tanker-tracking, this brought them down below 3 million barrels per day for the first eight weeks. Noting that the previous week’s shipments were extremely high, the four-week average was less volatile, it is important to remember this.

Moscow promised to reduce output by 500,000 barrels per day between last month and June as a response to a Group of Seven price limit on crude oil sales. The cut was then extended until the end of this year in a larger move by OPEC+ producer groups. The country’s energy ministry reported Friday that output fell by 700,000. This would indicate that seaborne flows will continue to fall in the weeks ahead.

Although the export slump may indicate lower production, weekly data can be volatile due to weather-related port closings and the scheduling for tankers. This can cause large swings in volumes from week to week. The most recent four-week shipment was still higher than the year’s average.Russia’s seaborne crude oil shipments

The increase in seaborne flows seen at the beginning of the year, as shown in the average data for four weeks, was likely due to the diversion of crude oil previously delivered to Poland through the Druzhba pipe. The flow to Germany was stopped at the end 2022, and Polish deliveries were stopped in February. In response to the halting of oil shipments via Druzhba, the state-controlled oil refiner PKN orlen SA in Poland has ended its contract with a Russian supplier.

These pipeline markets are being lost, which means that an additional 500,000 barrels per day of Russian crude oil is being exported through Russia’s ports. This is despite the European Union’s ban on almost all imports from Moscow of refined fuels and crude oil and the G7 price caps that combined prompted Moscow to threaten to reduce its output.

After six weeks of being moored at the port in west Africa, the Russian cargo was finally released into storage tanks at Ghana’s Tema refinery.

In the last four weeks, the combined crude oil volume on vessels headed to China and India as well as smaller flows to Turkey and amounts on ships that have not yet reached their final destination dropped to 3.24million barrels per day.

The ultimate destinations for cargoes loaded in January were obvious, and flows to China rose to post-invasion levels. They remained near those levels in February. Histories suggest that the majority of vessels heading to India from “Unknown Asia” are likely to end up in India.

The pace of ship-to-ship cargo transfers in the Mediterranean continues. This phenomenon has been particularly visible near Ceuta in Spain, north Africa and Kalamata on the Greek coast. Since the beginning of the year, at least 57 cargoes were transferred between ships in these two locations. Volumes transferred off the coast of Greece in the Bay of Lakonikos dropped to 6.4million barrels in March, which is equivalent to 208,000 barrels per day. This compares to 9.7 million barrels in February. This compares to 5.8 million barrels or 188,000 barrels per day transferred off Ceuta.

Crude flows fell by 1.24million barrels per day in the week ending April 7, compared to the previous week. This was compared to an eight week low of 2.89million barrels per day. The average seaborne exports fell by 108,000 barrels per day to 3.34million barrels per day on a 4-week basis.

All figures do not include cargoes of Kazakhstan’s KEBCO-grade. These are shipments that KazTransoil JSC has sent to Russia for export via the Baltic ports of Ust-Luga or Novorossiysk.

To create an export grade, the Kazakh barrels are mixed with crude oil of Russian origin. Kazakhstan has changed the name of its cargoes in order to differentiate them from Russian-shipped cargoes since Russia invaded Ukraine. Transit crude is exempt from sanctions by the European Union.

The average four-week average shipment to Russia’s Asian customers and those on vessels with no final destination edged down, but was still above 3 million barrels per day. The number of ships shipped dropped to 3.1million barrels per day from 3.18million barrels per day the day before.

Despite the fact that volumes to India and China seem to be declining, historical records show that many of the cargoes from ships with no initial destination end up in India or China.

On vessels that showed destinations such as Port Said in Egypt or Suez, Egypt, the equivalent of 576,000 barrels per day were transported from one ship to the next off Yeosu, South Korea. These voyages usually end in ports in India and China, which are shown in the chart below as “Unknown Asia” until they reach their final destination.

The “Other Unknown” volumes are those that have been transported on tankers to Ceuta, Kalamata, or any other destination. They run at 472,000 barrels per day for the four weeks up to April 7. Many of these cargoes transit the Suez Canal. However, some may end up in Turkey. For onward journeys into Asia, a growing number of these cargoes are being transferred to other vessels in the Mediterranean.Notice: Ships heading from Russia’s western ports to the Suez Canal are considered Unknown Asia. Unknown ships include vessels that are not clearly identified or those who have moved their cargo to unidentified ship.

In the 28 days leading up to April 7, Russia’s seaborne crude oil exports to European countries dropped to 83,000 barrels per day. Bulgaria was the only destination. These figures don’t include Turkey shipments.

Markets that used short-haul crude oil from the Baltic, Black Sea, and Arctic to transport their goods have been almost entirely lost. Long-haul destinations in Asia will replace them.

In the four weeks leading to April 7, exports to Turkey, Russia’s last Mediterranean customer, remained unchanged at 162,000 barrels per day.

The flow to Bulgaria, Russia’s Black Sea crude market, dropped to 83,000 barrels per day.

In the week ending April 7, aggregate flows of Russian crude oil fell dramatically, falling below 3 million barrels per day for the first two months. All regions saw lower shipping volumes, but the Baltic saw the largest drop in volume terms, with flows dropping by 520,000 barrels per day over the week before.

These figures exclude volumes from Ust-Luga or Novorossiysk, which are both Kazakhstan’s KEBCO grades.

The Kremlin’s crude-export duty inflows fell $17 million to a 5-week low of $39 Million in the seven days leading up to April 7. Four-week average income was lower at $45 million.

Vladimir Putin signed amendments to the tax assessment of Russia’s oil prices into law. Rates of mineral extraction tax, and profit-based taxes on oil companies, will be calculated using a decreasing discount to Brent prices. This is in addition to Urals crude oil assessments. The change does not affect export duty, which will be eliminated at the end 2023.

The duty rate was $1.95 per barrel for April, which is little different from March. This was based on an Urals price of $50.80 per barrel during the assessment period, which ran from February 15 to March 14.

These charts show the ships that leave each terminal, as well as the destinations for crude cargoes.In the week ending April 7, 27 Russian crude oil tankers were loaded by vessels in 27 countries

The daily volume of ships carrying Russian crude oil from the Baltic terminals fell to 1.36million barrels.

Novorossiysk, Black Sea Shipments fell to a 5-week low with flows falling to 250,000 barrels per day.

Arctic shipping volumes fell from their previous week’s peak, with only one Suezmax tanker loading during the week to April 7.

The Pacific saw a decrease in flows, with only 10 tankers loading at its three export terminals during the week to April 7. This is down from 11 last week.

Two cargoes of ESPO oil crude, out of eight that were loaded over the week, are now on vessels indicating their destination as Singapore. Earlier vessels that had been heading to India from Kozmino eventually made it to India.

Volumes remaining heading to unknown destinations are Sokol cargoes, which have been transferred to vessels at Yeosu recently or are being moved to an area near the South Korean port at De Kastri. These volumes are also headed to India.