(Bloomberg) -- Russia’s crude shipments edged up to the highest since early July as seasonal maintenance at refineries kept domestic oil processing depressed.
Four-week average cargoes crept up by 7,000 barrels a day in the week to Oct. 13. Refining fell to the lowest since mid-March in the first nine days of the month, averaging 5.07 million barrels a day. That left more crude available for export.
The small increase in shipments was accompanied by gains in average prices for Russia’s crude, which were lifted by a broader increase in global benchmarks as markets continued to worry that the deepening conflict between Iran and Israel could disrupt Middle East supplies.
The gross value of Russia’s crude exports rose to $1.52 billion a week in the 28 days to Oct. 13, from $1.48 billion in the four-week period to Oct. 6. That was the highest since the end of August.
Moscow’s use of the tankers sanctioned for their involvement in the Russian oil trade is accelerating, with close to one-third of the blacklisted vessels back at work. At least 21 of the 72 tankers sanctioned by Western nations in the past year have loaded a total of 24 cargoes of Russian oil since they were designated in response to Moscow’s 2022 invasion of Ukraine.
Crude Shipments
A total of 31 tankers loaded 23.14 million barrels of Russian crude in the week to Oct. 13, vessel-tracking data and port-agent reports show. The volume was little changed from 23.58 million barrels on the same number of ships the previous week.
That left four-week average flows almost unchanged at 3.33 million, up slightly from 3.32 million the previous week.
Russia’s more volatile daily crude flows in the week to Oct. 13 edged lower by about 60,000 barrels to 3.31 million, with volumes from the country’s Black Sea and Arctic ports ebbing.
Crude shipments so far this year are about 50,000 barrels a day, or 1.4%, below the average for the whole of 2023.
One cargo of Kazakhstan’s KEBCO crude was loaded at Novorossiysk on the Black Sea during the week.
Russia terminated its export targets at the end of May, opting instead to restrict production, in line with its partners in the OPEC+ oil producers’ group. The country’s output target is set at 8.978 million barrels a day until the end of November, after a planned easing of some output cuts was delayed by two months.
Moscow has also pledged to make deeper output cuts in October and November this year, then between March and September of 2025, to compensate for pumping above its OPEC+ quota earlier this year.
Russian data show the nation pumped marginally below its OPEC+ crude-output target in September, following a push from the group to improve adherence to its supply deal. At 8.97 million barrels a day, the official production number was 8,000 barrels a day below the country’s target, after taking account of the deeper compensation cut it agreed to make last month.
But Moscow’s assertion was contradicted by the secondary sources that OPEC uses to monitor compliance with output targets, who pegged Russia’s September production at 9.001 million barrels a day, about 23,000 barrels above its allowance.
Export Value
The gross value of Russia’s crude exports rose to $1.6 billion in the seven days to Oct. 13, from $1.54 billion in the period to Oct. 6. Income was boosted by an increase in weekly-average prices for Russia’s major crude streams, which were buoyed up by a broader gain in oil prices amid continuing tensions in the Middle East, as Israel considers its response to an Iranian missile attack.
Export values at Baltic ports were up week-on-week by about $3.10 a barrel, while shipments from the Black Sea rose by about $3.25 a barrel. Prices for key Pacific grade ESPO gained by about $3.60 compared with the previous week. Delivered prices in India were also up, rising by about $3.30 a barrel, all according to numbers from Argus Media.
Four-week average income also advanced, increasing to about $1.52 billion a week, from $1.48 billion in the period to Oct. 6. That was the highest since the period ending Sept. 1. The four-week average peak of $2.17 billion a week was reached in the period to June 19, 2022.
During the first four weeks after the Group of Seven nations’ price cap on Russian crude exports came into effect in early December 2022, the value of seaborne flows fell to a low of $930 million a week, but soon recovered.
Flows by Destination
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Asia
Observed shipments to Russia’s Asian customers, including those showing no final destination, slipped to 3.09 million barrels a day in the four weeks to Oct. 13. That’s about 5% below the average level seen during the recent peak in April.
About 1.21 million barrels a day of crude was loaded onto tankers heading to China. The Asian nation’s seaborne imports are boosted by about 800,000 barrels a day of crude delivered from Russia by pipeline, either directly, or via Kazakhstan.
Flows on ships signaling destinations in India averaged 1.7 million barrels a day, up from a revised 1.65 million for the period to Oct. 6.
Both the Chinese and Indian figures are likely to rise as the discharge ports become clear for vessels that are not currently showing final destinations.
The equivalent of about 150,000 barrels a day was on vessels signaling Port Said or Suez in Egypt. Those voyages typically end at ports in India or China and show up as “Unknown Asia” until a final destination becomes apparent.
The “Other Unknown” volumes, running at about 30,000 barrels a day in the four weeks to Oct. 13, are those on tankers showing no clear destination. Most originate from Russia’s western ports and go on to transit the Suez Canal, but some could end up in Turkey. Others may be moved from one vessel to another.
Greece has extended naval exercises until November in an area that’s become associated with the transfer of Russian crude. These naval drills haven’t entirely halted ship-to-ship transfers of Russian crude in the area, though. The supertanker Alma recently received crude from two smaller tankers, Sagar Violet and Arlan, in a narrow channel located between two areas that have been closed to shipping.
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Europe and Turkey
Russia’s seaborne crude exports to European countries have ceased, with flows to Bulgaria halted at the end of last year. Moscow also lost about 500,000 barrels a day of pipeline exports to Poland and Germany at the start of 2023, when those countries stopped purchases.
Turkey is now the only short-haul market for shipments from Russia’s western ports, with flows in the 28 days to Oct. 6 edging higher to about 180,000 barrels a day.
NOTES
This story forms part of a weekly series tracking shipments of crude from Russian export terminals and the gross value of those flows. The next update will be on Tuesday, Oct. 22.
All figures exclude cargoes identified as Kazakhstan’s KEBCO grade. Those are shipments made by KazTransoil JSC that transit Russia for export through Novorossiysk and Ust-Luga and are not subject to European Union sanctions or a price cap. The Kazakh barrels are blended with crude of Russian origin to create a uniform export stream. Since Russia’s invasion of Ukraine, Kazakhstan has rebranded its cargoes to distinguish them from those shipped by Russian companies.
Vessel-tracking data are cross-checked against port agent reports as well as flows and ship movements reported by other information providers including Kpler and Vortexa Ltd.
If you are reading this story on the Bloomberg terminal, click for a link to a PDF file of four-week average flows from Russia to key destinations.
--With assistance from Sherry Su.
©2024 Bloomberg L.P.