While it’s too early to say with certainty that US self-sanction and pressure on India, China and other buyers will have a lasting impact, there are early signs that Asian countries may not be able to completely replace European buyers from Russia. The trend is seen most clearly when week-to-week variations are smoothed using moving averages.
There is still a long way to go before the decline in shipments hits the Kremlin’s war chest enough to give President Vladimir Putin a second thought about his invasion of Ukraine. Rising crude prices boost Russia’s export duty revenue and offset some of the reduction in crude flows – estimated crude export duty revenue still exceeds $160 million per week. Still, while that boosts it by nearly 25% from immediately before the invasion, it’s down a similar percentage from April’s peak levels.
A US-led plan to impose a price cap on Russian oil exports is in the works but faces significant hurdles, while President Joe Biden’s demand for more oil from Saudi Arabia and its OPEC partners received a somewhat ambivalent response. Any increase will come from the OPEC+ group of oil producers, rather than unilaterally from Saudi Arabia and the United Arab Emirates. Russia’s leading role in this group means any additional offers are likely to be modest.
The best hope for reducing the Kremlin’s oil revenues is a drop in global demand for oil leading to lower prices, but the major forecasting agencies don’t see that on the horizon.
Assessing exports through ship movements is very noisy due to loading schedules, maintenance, weather conditions and other factors that can affect flows. Taking longer-term averages can dampen some, but not all, of this noise.
Using a four-week moving average of exports indicates that Russia’s maritime flows have been on a downward trend since mid-June, according to tanker tracking data monitored by Bloomberg.
On that basis, flows fell to 3.24 million barrels per day through July 15, falling in each of the past four weeks. They are now down 467,000 barrels per day, or 13%, since mid-June.
Asian countries, dominated by China and India, capture more than half of all crude shipped from Russia. Flows to Asia have accounted for between 55% and 56% of Russia’s total maritime exports over the past six weeks. This figure includes tanker volumes from Baltic and Black Sea ports to the Suez Canal and is down from a high of 63% in the four weeks to April 15.
Shipments to China averaged 784,000 barrels per day over the past four-week period, with flows to India of 679,000 barrels per day. But both figures are expected to rise, once destinations are known for around 350,000 barrels of crude per day on tankers that have yet to report final unloading locations. Shipments to Asian countries other than China and India have all but dried up, with only rare shipments heading to Japan and South Korea from Pacific terminals.
Based on current destinations, the average flow of Russian crude to Asia in the four weeks to July 15 was the lowest in 15 weeks. This remains true if all crude on tankers that have yet to report whether they are heading to the region begin reporting Asian ports in the coming weeks.
The volume shipped from Russia to Northern Europe has been slowly recovering in recent weeks. Most of this quantity goes to storage tanks in Rotterdam in the Netherlands, while small volumes go to Poland and Finland. Flows in the four weeks to July 15 topped 450,000 barrels per day for the first time in 11 weeks.
Four-week average shipments of Russian crude to the Mediterranean soared after the invasion of Ukraine, but have fallen since the peak in mid-June. In the period up to July 15, they were the lowest in 13 weeks, driven by lower volumes to Italian ports (see chart above).
Lukoil’s ISAB refinery on the Italian island of Sicily remains a key buyer of Russian crude, while Turkey has also increased its purchases. After a surge of shipments in mid-April, flows to the Italian port of Trieste have slowed to around one a week.
Combined shipments to Bulgaria and Romania have fallen 40% since mid-June on a four-week rolling average, averaging 230,000 barrels per day in the week to July 15 (see chart below). -above). Deliveries to Bulgaria have fallen from their June highs, while shipments to Romania are also down over the past four-week period.
Aggregate crude flows from Russian ports rose slightly week-on-week, rising 73,000 barrels per day, or 2%, to 3.19 million barrels per day in the previous week. the 15th of July.
A decline in shipments from the Baltic was offset by increases from the other three exporting regions, so maritime crude shipments from Russia only recovered a small portion of the previous week’s decline.
Moscow’s revenue from export duties rose slightly in the week to July 15, rising $4 million, or 2%, to $168 million, from a revised $164 million in July. the week before July 8.
The slight increase took weekly rights revenue to its highest level in six weeks, but it is still significantly below the highs seen in April.
Crude shipments in July brought the Kremlin $55.20 a ton (about $7.53 a barrel), compared with $44.80 a ton ($6.11 a barrel) in June. This is the highest duty rate applied by the Russian government since April, reflecting an increase in Ural prices between mid-May and mid-June compared to the previous month. But rates will dip slightly in August, falling to $53 a tonne (about $7.23 a barrel).
The following graphs show the number of vessels leaving each export terminal and the destinations of crude shipments from each of the four export regions. Destinations are based on where ships report they are heading at the time of writing, and some will almost certainly change as voyages progress.
A total of 31 tankers loaded 22.3 million barrels from the country’s export terminals in the week to July 15, according to ship tracking data and port agent reports.
The total volume of crude on ships loading from the Baltic terminals of Primorsk and Ust-Luga decreased slightly in the week to July 15, with one less tanker leaving Ust-Luga.
The volume of tankers loading into Baltic terminals and showing destinations in northern Europe returned to its lowest level since March, with more crude heading to the Mediterranean.
Flows from the Baltic to Asia remained at just over 625,000 barrels a day for a fourth week, but volumes on ships that have yet to show a final destination suggest those numbers will rise.
Six tankers completed loading at Novorossiysk in the Black Sea in the week to July 15, one more than the previous week. All display destinations indicating that they will unload at ports in the Mediterranean and Black Sea regions.
Shipments from floating storage units at the Russian Arctic port of Murmansk increased in the week to July 15. One cargo was loaded from Gazprom Neft’s Umba floating storage unit and one from Lukoil’s Kola unit. Both are heading for Rotterdam.
Crude flows from Russia’s three eastern oil terminals – Kozmino, De Kastri and Prigorodnoye – rebounded week-on-week to 938,000 barrels per day (see chart above).
Eight tankers loaded ESPO crude at Kozmino, unchanged from the previous week. One shipment is heading to India, while China has taken the others.
There were no shipments for a 10th week from De Kastri, which processes Sokol crude from the Sakhalin 1 project.
A shipment of Sakhalin Blend crude was loaded in the week leading up to July 15 and delivered to South Korea.
Note: This story is part of a regular weekly series tracking crude shipments from Russian export terminals and the resulting export duty receipts for the Russian government.