Russia’s crude shipments hit five-month high - Bloomberg
Russia’s seaborne crude shipments jumped to a five-month high last week, as time runs short for vessels leaving Baltic and Arctic ports to reach key destinations before European Union sanctions kick in, according to Bloomberg.
Cargoes shipped from Russia rose to 3.6 million barrels a day, the highest since early June, while the less volatile four-week average was also up, reaching the most since August.
The UK has followed the EU’s lead in banning its companies from providing insurance and other service to ships carrying Russian crude, unless the cargo is purchased at a price below a yet-to-be-agreed cap set by a coalition of the G-7 nations and Australia. This move, like the EU ban, will come into effect on Dec. 5.
The UK will issue waivers for contracts to ship Russian oil signed before Dec. 5 and delivered before Jan. 19, aligning with the US’s approach.
The biggest increase, in both volume and percentage terms, was in shipments from the Arctic terminal of Murmansk. It takes vessels longer to reach destinations in Asia from Murmansk than it does from terminals in the Baltic or the Black Sea and the jump could reflect a bid to deliver volumes before EU sanctions prevent the bloc’s ships from hauling Russian crude and ban the provision of insurance and other services to the rest of the world’s fleet.
Many more ships are leaving Russian ports without signaling a final port of discharge. In particular, there has been a big jump in vessels showing their next destination as Port Said or the Suez Canal. This has been accompanied by a slump in the volume on tankers indicating that they’re heading to India. It remains likely that most of these vessels will begin to signal Indian ports once they pass through the canal.
Tankers loading now at Primorsk or Ust-Luga are unlikely to reach discharge terminals in China or India before the EU ban hits. A cargo of crude from the Arctic port of Murmansk, heading to China via the Northern Sea Route along Russia’s Arctic coast, passed through the Bering Strait at the weekend, but this is unlikely to become a major route for shipments with a lack of suitable ships and winter ice likely to make it unusable for several months.
Shipments from Russia’s Pacific ports take only a few days to reach Chinese import terminals and the voyage from the Black Sea to Turkey is similarly short. In contrast, deliveries to India from all of Russia’s export terminals take several weeks, putting them at greater risk of falling foul of sanctions before they arrive.
On a four-week average basis, overall seaborne exports rose to an 11-week high of 3.18 million barrels a day. The biggest increase was in shipments on takers that aren’t showing final destinations.
All figures exclude cargoes identified as Kazakhstan’s KEBCO grade. These are shipments made by KazTransoil JSC that transit Russia for export through Ust-Luga and Novorossiysk.
The Kazakh barrels are blended with crude of Russian origin to create a uniform export grade. Since the start of operation in Ukraine, Kazakhstan has rebranded its cargoes to distinguish them from those shipped by Russian companies. Transit crude is specifically exempted from the EU sanctions.
Russia’s seaborne crude exports to European countries rose to a six-week high of 762,000 barrels a day in the 28 days to Nov. 4. Flows were up by 51,000 barrels a day, or 7%, from the period to Oct. 28. These figures do not include shipments to Turkey.
The volume shipped from Russia to northern European countries edged higher in the four weeks to Nov. 4. All shipments went to storage tanks in Rotterdam for a fourth week.
Exports to Mediterranean countries also rose slightly in the four weeks to Nov. 4. Flows to the region, including Turkey, which is excluded from the European figures at the top of this section, rose to a three-week high. Shipments to Turkey were unchanged at 330,000 barrels a day. A tanker carrying crude from Murmansk discharged at Savona in northern Italy, ship movement data show.
Combined flows to Bulgaria and Romania were unchanged at 167,000 barrels a day, little more than half of the peak volume seen in June. Almost all of the volume heading to customers in the Black Sea ends up in Bulgaria. The country secured a partial exemption from the EU ban on seaborne crude imports from Russia.
Shipments to Russia’s Asian customers, plus those on vessels showing no final destination, which typically end up in either India or China, soared in the seven days to Nov. 4. The volume of crude heading to Asia hit 1.94 million barrels a day on a four-week rolling average basis, with a further 127,000 barrels a day on tankers whose point of discharge is unclear. The combined figure is the highest for the year so far.
The November duty rate is $5.83 a barrel, the lowest level since January 2021, with the Urals discount to Brent during the latest calculation period, which ran from Sept. 15 to Oct. 14, at about $25.50 a barrel.
A total of 34 tankers loaded 25.2 million barrels of Russian crude in the week to Nov. 4, vessel-tracking data and port agent reports show. That’s up by 3.2 million barrels to the highest since June. Destinations are based on where vessels signal they are heading at the time of writing, and some will almost certainly change as voyages progress.
Shipments from Novorossiysk in the Black Sea slipped after the previous week’s jump. This was the only region to show a week-on-week drop in crude flows.
Arctic shipments soared to their highest level since February. The Vasily Dinkov, which is currently heading to Rizhao in China via the Northern Sea Route along Russia’s Arctic coast, passed through the Bering Strait at the weekend.
Shipments from the Pacific jumped to their highest since April. All of the eight cargoes of ESPO crude that were loaded are heading to China. Two vessels that loaded cargoes of Sokol are showing destinations of Yeosu in South Korea, though it likely that they will conduct ship-to-ship transfers outside the port.
