Russian exports of crude oil and petroleum products by sea continued to escape the push of Western sanctions during the first half of August, exceeding 6 million barrels per day for the first time since they reached a post-pandemic high in April, according to tanker tracking data.
Crude exports from Russia increased by 140,000 bpd on the month to an average of 3.36 million bpd from August 1-16, to remain above pre-war levels for the fifth month in a row, according to preliminary data from ship analytics provider Kpler. Russia’s petroleum product exports also rose for the third straight month in the period to average 2.75 million b/d, the highest since Russia invaded Ukraine on Feb. 24.
Although refiners in Asia continue to buy Russian crude at a discount, data shows the pace of crude exports from Moscow to India slowed to 670,000 bpd during the period, the lowest since exports hit an all-time high of nearly 1 million b/d in April.
Despite a slight increase in flows to China during the month, exports of Russian crude to China and India – now its main customers – fell to 1.56 million bpd from 1.74 million b/d in July. By contrast, Russian exports to the Netherlands, Italy and Turkey all rose sharply in early August, the data showed. The three importers saw Russian crude flows increase by a combined 400,000 bpd from July.
Russian oil flows to the Netherlands – home to the Amsterdam-Rotterdam-Antwerp refining hub – are in the spotlight as EU sanctions ban most Russian oil flows to the trading bloc in the beginning of next year. EU year-end restrictions are also expected to hit the global marine insurance market, increasing uncertainty about tanker accessibility after December.
But after slipping to a post-war low of 240,000 bpd in July, flows of Russian crude to the Netherlands jumped by more than 400,000 bpd in early August, the data showed. about 100,000 bpd compared to pre-war levels. Russia’s Lukoil is also shipping more crude to its ISAB refinery in Sicily – the largest in Italy – boosting Russian crude flows to the country.
Lukoil is currently not subject to direct sanctions but the Italian government has considered temporarily nationalizing the ISAB plant, which accounts for a fifth of Italy’s refining capacity.
With the EU’s ban on Russian oil imports and related marine insurance looming, some 3 million b/d of Russian marine crude and products imported by Europe in June/July will require new buyers. Germany and Poland have also pledged to halt around 500,000 bpd of shipments through the northern Druzhba pipeline from Russia.
As a result, S&P Global Platts Analytics expects Russian crude and condensate production to fall by 1.2 million bpd between July and January 2023, to 1.5 million bpd below pre-November volumes. conflict.
“By early 2023, nearly 3.5 million b/d of crude and products still reaching Europe must be redirected elsewhere, while tanker availability will be curtailed by Western sanctions, restricting marine insurance , financing and other services,” said Platts Analytics’ geopolitical director. Councilman Paul Sheldon said in a note.
Although imports of Russian crude from the EU have fallen by more than 1 million b/d from pre-war levels, Russia remains the main source of crude shipped by the trading bloc with more than 1, 8 million b/d of flow to the region in early August. , the data shows, unchanged on the month. Data confirms that the US, Norway, Egypt, Iraq, Brazil and Angola have emerged as the main alternative suppliers of crude to the EU, collectively supplying an additional 1 million bpd of crude since February.
The tanker data also points to the growth of obscure, potentially gray market deals to allow European buyers to import Russian crude via third countries. Exports of rare crude from the UAE’s Fujairah port hub to the EU averaged 150,000 bpd in early August, the data showed, coinciding with flows of equally rare Russian crude into the UAE at from April this year.
Dark trade flows
On the oil products side, the data shows that the EU has replaced some 500,000 bpd of direct Russian imports with alternatives from the Netherlands, Turkey and Saudi Arabia since the start of the war.
But with overall exports of Russian products rebounding to pre-war levels of around 3 million barrels per day, some of the EU’s alternative supplies are likely to be either Russian products re-mixed in trading centers or processed Russian crude resold as a non-Russian product. exports, according to market watchers.
EU product imports from the ARA refining center remain around 40% above pre-war levels, for example, while the region sources more fuels from Italy and Turkey, two countries where some domestic refiners process more Russian crude.
Outside Europe, flows of petroleum products, probably from recomposed Russian stocks, are on the rise.
The eastern port of Fujairah in the eastern United Arab Emirates is now a key fuel oil supplier for the United States, which recently imported record levels from Fujairah as Russian fuel oil is diverted from Europe to the Middle East. Before February, there were only seven cases where Fujairah had sent fuel oil to the United States since January 2017, according to Kpler.
Saudi Arabia has also seen its fuel oil imports from the port hub soar since the war in Ukraine to nearly 70,000 bpd in July. Market watchers believe Saudi Arabia is buying discounted Russian fuel oil to help fuel its power plants in a bid to save on its domestic crude normally used as a direct fuel for power generation.