(Bloomberg) — Russian crude oil shipments fell last week to their lowest level since July, sending the country’s gross income from this key trade to its lowest level in about eight months.
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Four-week average crude oil volumes fell to 3.1 million barrels per day in the week to Sept. 22, down 115,000 barrels per day from the previous period. Weekly flows, which are more volatile, fell by about 390,000.
A four-day disruption in operations at the Kozmino export terminal on Russia’s Pacific coast suggests maintenance work on the port, or the pipeline that supplies it, has caused a sharp drop in the country’s eastern water flows.
Gross income shrank to its lowest level since late January on both a weekly and four-week basis as the drop in volumes outpaced the first price increase in three weeks for the country’s flagship Urals crude. That $3-a-barrel boost pushed the quality back above the $60 threshold that G7 nations wanted to impose on Moscow as punishment for its invasion of Ukraine.
The U.S. is increasing pressure on the Kremlin, triggered by recent oil price weakness. The Treasury Department’s Office of Foreign Assets Control has asked at least one marine insurer for information on 14 companies it suspects of violating sanctions on Russian oil.
The average level of Russian oil processing fell to 5.28 million barrels per day from September 12 to 18, the lowest weekly level since late June, as the country’s refineries went into seasonal maintenance.
Crude oil deliveries
A total of 27 tankers loaded 20.23 million barrels of Russian crude in the week to Sept. 22, vessel tracking data and port agency reports showed. The volume was down from a revised 22.95 million barrels on 31 vessels the week before.
That means daily Russian crude oil flows by sea fell by about 390,000 barrels to 2.89 million in the week to September 22, the lowest level since the first week of July.
The less volatile four-week average also fell, 115,000 barrels a day to 3.1 million from 3.21 million the week before. It is only the third time this year that this measure of deliveries has fallen this low.
Crude oil deliveries so far this year are about 60,000 barrels per day below the average for all of 2023.
The decline in supplies from Kozmino was largely offset by an increase in supplies from the Baltic port of Primorsk.
Two cargoes of Kazakh KEBCO crude oil were loaded this week in Novorossiysk on the Black Sea.
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 $1.29 billion in the seven days to September 22, from $1.43 billion in the period to September 15. The decline in weekly flows was only partly offset by a rise in prices for key Russian crude flows.
Export values at Baltic ports rose by around $3 a barrel week-on-week, while deliveries from the Black Sea rose by around $2.90 a barrel. Prices for key Pacific-grade ESPO also rose by around $2.90 a barrel compared to the previous week. Delivered prices in India rose less sharply, by around $1.50 a barrel, all according to Argus Media figures.
Ural crude shipped from Russia’s Baltic ports traded for an average of $62.50 last week, data compiled by Argus Media showed. That was after the average had fallen below $60 a barrel the week before, the first time it had fallen below the G7 price limit since December.
The four-week average income fell to its lowest point since January, to about $1.42 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, rose to 2.92 million barrels per day in the four weeks to September 22, about 10% below the average level seen during the recent peak in April.
About 1.2 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 1.57 million barrels per day, down from a revised 1.67 million for the period to September 15.
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 100,000 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.
The volumes of “Other unknowns”, which stood at around 50,000 barrels per day in the four weeks to 22 September, are those on tankers that have no clear destination. Most come from Russia’s western ports and pass through the Suez Canal, but some may end up in Turkey. Others may be shifted from one vessel to another.
Greece has extended naval exercises in an area that has been linked to the transfer of Russian crude oil until November. However, the naval exercises have not completely halted the ship-to-ship transfer of Russian crude oil in the area. The supertanker Alma recently received crude oil from two smaller tankers, Sagar Violet and Arlan, in a narrow channel between two areas that are closed to shipping. TK TK
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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.
Turkey is now the only short-haul market for shipments from Russia’s western ports, with flows in the 28 days to September 22 rising to around 220,000 barrels per day, the highest level in five weeks.
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 Tuesday, October 1.
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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