Russia’s seaborne crude flows are taking on a new pattern as Moscow seeks to deal with impending European sanctions on its exports. India has moved from being an insignificant buyer of Russian crude to the second-biggest destination for shipments, behind only China.
As China emerges as the only market for crude shipped from ports on Russia’s Pacific coast, India has rapidly become the largest purchaser of barrels loaded at ports on its western shores. Asian buyers, dominated by China and India, are now taking close to half of all the crude shipped from the country’s ports, with a steady stream of tankers heading around Europe and through the Suez Canal from the Baltic and Arctic Seas.
Almost 860,000 barrels a day of crude were loaded onto tankers at Russia’s western export terminals in the week to June 10 before heading to destinations in Asia. And the figure will almost certainly be revised higher once destinations become apparent for almost 210,000 barrels a day that are on vessels yet to show a final discharge point.
The European Union has agreed a sixth package of sanctions in response to Russia’s invasion of Ukraine, including a ban on imports of the country’s crude by sea, which will come into effect in December. In the meantime, several refiners, shippers and traders are self-sanctioning Russian oil. Still, while traded has been diverted to Asia, so far the curbs are having little impact on the overall level of shipments.
Overall seaborne crude flows did slip in the seven days to June 10, giving up the gains of the previous week. A total of 34 tankers loaded 24.9 million barrels from the country’s export terminals, vessel-tracking data and port agent reports show. That put average flows at 3.55 million barrels a day, down by 10% from 3.94 million in the week ended June 3.
Flows of Urals crude from terminals in the Baltic, Russia’s primary outlet, and the Arctic, were unchanged in the week to June 10. But both the Black Sea and the Pacific saw weekly volumes fall by almost one-quarter, or two ships in each case.
While shipped volumes fell by 10% in the week to June 10, Moscow’s revenue from export duty slipped even more, falling by $28 million, or 16%, to $152 million from a revised $180 million in the week to June 3. The dip in revenue reflects a lower per-barrel rate of export duty on shipments made in June, which applied to all shipments in the week to June 10, but only some in the week to June 3.
Duty rates fell by 10% between May and June, dropping to $44.80 a ton, equivalent to about $6.11 a barrel, from $49.60 a ton, or $6.81 a barrel, in May. That’s down from $61.20 a ton, or $8.30 a barrel in April. Duty rates have now fallen by 27% since April, reflecting the steep discounts that Russia is being forced to offer to secure new buyers for its crude in Asia.
The number of cargoes shipped from Russian ports fell by four to 34 in the week to June 10 compared with the previous seven days. Fewer ships departed from ports in the Black Sea and the Pacific, while the numbers of shipments from the Baltic remained unchanged.
Crude Flows by Region
The following charts show the destinations of crude cargoes from each of the four export regions. Destinations are based on where vessels signal they are heading at the time of writing, and some will almost certainly change as voyages progress.
The total volume of crude on ships loading from the Baltic terminals at Primorsk and Ust-Luga remained steady in the week to June 10, with one more ship leaving Primorsk than in the previous week offsetting one fewer from Ust-Luga. The volume on tankers showing destinations in northwest Europe was unchanged, while shipments to the Mediterranean rebounded from the previous two weeks. The volume on tankers signaling destinations in Asia was the lowest in three weeks.
Flows to Asia are likely to rise, though, when ships that are yet to signal a final destination begin to show credible discharge locations.
Crude shipments from Russia’s Baltic ports are still going according to plan. All cargoes scheduled to load at Primorsk and Ust-Luga during the week to June 10 were shipped within a day of their planned loading dates.
Six tankers completed loading at Novorossiysk in the Black Sea in the week to June 10, falling for a second week. Half of the crude remained within the Black Sea region, even though shipments to Bulgaria and Romania slipped back from the previous week’s high. Shipments to Asia fell, with one vessel heading to India.
All of the cargoes scheduled from Novorossiysk during the week loaded within two days of the dates on loading programs seen by Bloomberg.
Two ships loaded from Gazprom Neft’s Umba floating storage facility at Murmansk, one heading for Rotterdam and the other to India. A third vessel took a cargo from the Kola storage tanker used by Lukoil and is heading to the company’s ISAB refinery on the Italian island of Sicily.
Crude flows from Russia’s three eastern oil terminals — Kozmino, De Kastri and Prigorodnaya — fell for the first time in four during the week to June 10, slipping by 209,000 barrels a day, or 22%, week on week to 728,000 barrels a day. That’s the lowest in six weeks.
Six tankers loaded ESPO crude at Kozmino, down by two from the previous two weeks. China has become the only buyer of Russia’s Pacific crude grades, with all cargoes loaded in the past three weeks heading there. Ship-to-ship transfers of ESPO crude off the South Korean port of Yeosu have become a regular feature, with a small fleet of ships owned by China’s Cosco Shipping Holdings Co. shuttling crude from Kozmino and transshipping it onto larger vessels, also owned by Cosco, for onward delivery to China.
There were no shipments for a fifth week from De Kastri, which handles Sokol crude from the Sakhalin 1 project. Three Sovcomflot tankers have been anchored empty off the oil terminal since late April.
One cargo of Sakhalin Blend crude was loaded from the terminal at the southern end of the island. Like all those from Kozmino, it is heading to China.
Long Voyages and Cargo Transfers
Six tankers left Russia’s western export terminals signaling destinations in India in the week to June 10. Another five departed showing no clear final destination for their cargo. One is showing its destination as Azores (see below) and one is signaling Port Said. Another is showing a destination of Algeciras in Spain, but previous tankers carrying Russian crude to the same port, which lies at the entrance to the Mediterranean from the Atlantic ocean have changed their destination signal on reaching the vicinity of the port without discharging.
Several tankers that loaded in earlier weeks are still not showing final destinations, with most continuing to indicate Port Said .
Since the Aframax tanker Zhen I transferred its cargo of about 100,000 tons of Urals crude to the VLCC Lauren II between Madeira and the Azores in the middle of the Atlantic Ocean, three more ships loaded with Russian crude are heading in the same direction. The Afrapearl, Skadi and Emily S are all showing destinations of the Azores, with arrival dates between June 14 and June 17. The Lauren II remains in the area.
No ship-to-ship transfers of Russian crude were observed in the week to June 10.
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: Bloomberg uses commercial ship-tracking data to monitor the movement of vessels. Ships can avoid detection by turning off on-board transponders, as has been done widely by the Iranian tanker fleet. There is no evidence yet that this is being done by crude oil tankers calling at Russian ports.
Note: Destinations are those signaled by the vessel and are monitored until the cargo is discharged. Destinations may change during a voyage, even under normal circumstances, and the final discharge point for the cargo may not be known until that port is reached.
Note: Cargo volumes are based on loading programs, where those are available, and on a combination of the ship’s capacity and its depth in the water where we have no other information.