(Bloomberg) — Falling oil prices have pushed Russian revenue from crude sales to the lowest level since February, underscoring the challenges Moscow faces amid weakening global markets.
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The price drop sent Russia’s flagship Urals crude back toward the $60-a-barrel threshold that the Group of Seven wanted to impose on the Kremlin as punishment for its invasion of Ukraine. The grade from Russia’s Baltic ports traded for an average of $60.12 on Friday, Argus Media data showed.
Four-week average crude oil volumes fell to 3.13 million barrels per day in the week, down 30,000 barrels per day from the previous period. Weekly flows, which are much more volatile, moved in the opposite direction, rising by about 40,000 barrels per day.
The drop in global prices prompted several OPEC+ members, including Russia, to delay until December the easing of production cuts that had been set to take effect in October. The delay means that Moscow will have to actually cut output in October and November to compensate for pumping activity above OPEC+’s target set earlier this year, rather than being able to offset the compensation cuts with a rising target.
Crude oil deliveries
A total of 29 tankers loaded 21.99 million barrels of Russian crude in the week to Sept. 8, vessel tracking data and port agency reports showed, up from 21.67 million barrels on 29 vessels the previous week.
That means daily Russian crude oil flows by sea rose by about 40,000 barrels to 3.14 million in the week through September 8.
The less volatile four-week average moved in the opposite direction, falling 30,000 barrels per day to 3.13 million from 3.16 million the week before. Apart from one week when it dipped below 3 million barrels per day, deliveries by this measure have ranged between 3.13 million and 3.25 million barrels per day since the beginning of July.
Crude oil deliveries so far this year are about 45,000 barrels per day below the average for all of 2023.
During the week, one cargo of Kazakh KEBCO crude oil was loaded in Novorossiysk and one in Ust-Luga.
Russia ended its export targets in late May, opting instead to cut production, in line with its partners in the OPEC+ oil producer group. The country’s output target has been set at 8.978 million barrels per day through the end of November, after a planned easing of some output cuts was postponed by two months.
Moscow has also pledged to further cut production in October and November this year, and then between March and September 2025, to compensate for oil output above the OPEC+ quota from earlier this year.
Russian data showed the country came very close to meeting its OPEC+ crude oil production target last month after the group pushed for better compliance with the supply deal.
Export value
The gross value of Russian crude exports fell to $1.44 billion in the seven days to September 8, from $1.52 billion in the period to September 1. The small increase in weekly flows was more than offset by a decline in prices for key Russian crude flows, which took the weekly value of overseas shipments to its lowest level since January.
Export values at Baltic ports fell by about $6.30 a barrel week-on-week, while deliveries from the Black Sea fell by about $5.90 a barrel. Prices for key Pacific-grade ESPO held up better, losing about $2.70 a barrel compared to the previous week. Delivered prices in India also fell by about $5.90 a barrel, all according to figures from Argus Media.
The four-week average income fell to its lowest point since February, about $1.51 billion a week. The peak of the four-week average of $2.17 billion a week was reached in the period ending June 19, 2022.
In the first four weeks after the G7 countries put a price cap on Russian crude oil in early December 2022, the value of overseas flows fell to a low of $930 million per week, but quickly recovered.
Flows by destination
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Asia
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Observed deliveries to Russian Asian customers, including those without a final destination, fell to 2.92 million barrels per day in the four weeks to September 8, about 10% below the average level in April.
About 1.25 million barrels of crude oil per day were loaded onto tankers bound for China. The Asian country’s overseas imports are bolstered by about 800,000 barrels of crude oil per day coming in via pipelines from Russia, either directly or via Kazakhstan.
Oil flows on ships calling at Indian destinations averaged 1.62 million barrels per day, down from a revised 1.68 million for the period to September 1.
Both the Chinese and Indian figures are likely to rise as discharge ports become clearer for vessels that currently do not specify final destinations.
The equivalent of about 30,000 barrels a day was on ships calling at Port Said or Suez in Egypt. Those voyages usually end at ports in India or China and appear as “Unknown Asia” until a final destination becomes clear.
Russian oil flows continue to be hampered by the Greek navy conducting exercises in an area linked to the transfer of Russian crude. These naval exercises are scheduled to continue until September 15. As a result, recent cargo changes have been moved to the waters off the Egyptian port of Said, the Gulf of Oman at the port of Sohar and, most recently, the Omani port of Duqm.
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Europe and Turkey
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Russia’s overseas crude exports to European countries have stalled, with flows to Bulgaria halted late last year. Moscow also lost about 500,000 barrels per day of pipeline exports to Poland and Germany at the start of 2023, when those countries halted purchases.
Pipeline deliveries to Hungary, which cross Ukraine via the southern leg of the Druzhba pipeline system, appear to have been disrupted in August by Kiev’s ban on Lukoil PJSC crude passing through its territory. Shipments to Slovakia along the same route appear to have been unaffected, according to industry data. Hungarian refiner Mol Nyrt. said it had reached a deal that will ensure continued supplies of Russian crude via the pipeline through Ukraine.
Turkey is now the only short-haul market for shipments from Russia’s western ports. Flows in the 28 days to September 8 were unchanged at around 210,000 barrels per day.
NOTES
This story is part of a weekly series tracking crude oil deliveries from Russian export terminals and the gross value of those flows. The next update will be on Wednesday, September 18.
All figures exclude cargoes identified as Kazakhstan’s KEBCO class. These are shipments of KazTransoil JSC that transit Russia for export via Novorossiysk and Ust-Luga and are not subject to European Union sanctions or a price cap. The Kazakh barrels are blended with Russian-origin crude to create a uniform export flow. Since the Russian invasion of Ukraine, Kazakhstan has relabeled its cargoes to distinguish them from those shipped by Russian companies.
Vessel tracking data is compared with reports from port agents and with flows and vessel movements reported by other information providers, including Kpler and Vortexa Ltd.
If you are reading this story on the Bloomberg terminal, click here for a link to a PDF file showing average flows from Russia to major destinations over four weeks.
–With assistance from Sherry Su.
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