Russia's Oil Exports Slump After Recent Surge

Russia's seaborne crude exports fell last week after surging in the previous seven days. This contributed to the smallest inflow into the Kremlin's war-chest since Moscow sent its forces into Ukraine.
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Russian crude oil exports fell sharply last week, with the biggest declines coming from Pacific ports. Overall, exports were down 22% from the previous week, giving up most of the gains made in the previous week. Baltic shipments were the only exports that remained stable.
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Despite the drop, four-week average flows edged higher, remaining just above 3 million barrels a day for a second week. By this measure, seaborne crude exports were broadly in line with levels seen for most of the second half of 2022.
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Inflows to the Kremlin's war-chest from crude export duties have fallen sharply, dropping in line with the slump in weekly flows. A revised formula, introduced at the start of 2023, has halved per barrel duty rates and that, combined with the drop in flows, has slashed revenues to the lowest since before the war on both a weekly and four-week average basis. Moscow is considering changes to the way it calculates taxes on oil to boost revenues.
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Although overall crude flows are still happening despite a European ban on seaborne imports from Russia, Moscow will soon face new challenges with similar sanctions on its product exports taking effect on February 5. These sanctions will also include a price cap, designed to keep volumes flowing to non-European destinations while limiting the Kremlin's income.
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The data for each week remains highly volatile, depending on the timing of individual shipments and factors like weather conditions and work at ports.
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Russia is one of the world's leading suppliers of crude oil, and its seaborne shipments play a vital role in global energy markets. Russia has a large and sophisticated fleet of oil tankers that helps to ensure the reliable delivery of its crude exports.
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Tankers carrying Russian crude are becoming more secretive about their final destinations. In the four weeks to Jan. 20, vessels carrying more than 30 million barrels of Russian crude left port without showing a clear final destination. This is the equivalent of 1.08 million barrels a day of exports.
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On a four-week average basis, overall seaborne exports increased by 22,000 barrels a day compared with the period to Jan. 13. At 3.08 million barrels a day, the measure was the highest since November.
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The average crude shipment from Russia over a four-week period, by destination.
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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.
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Kazakh barrels are blended with crude of Russian origin to create a uniform export grade. However, since the invasion of Ukraine by Russia, Kazakhstan has rebranded its cargoes to distinguish them from those shipped by Russian companies. Transit crude is specifically exempted from European Union sanctions.
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The volume of crude oil on vessels heading to China, India and Turkey increased in the four weeks to Jan. 20, averaging 2.9 million barrels a day. This is up 64,000 barrels a day from the previous period, and is the highest level since Bloomberg began monitoring the flows in detail at the beginning of 2022.
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The average crude shipment from Russia over a four-week period, by destination.
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The recent slump in flows to Turkey has been particularly dramatic, with most of the ships yet to show destinations likely to end up in India or China. Vessel-tracking data monitored by Bloomberg show that imports from Russia, which rose to almost 400,000 barrels a day in September, have slumped to just 47,000 barrels a day over the past four weeks. This is as low as they were before Moscow's troops invaded Ukraine last February.
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The average number of barrels shipped to Russia's Asian customers each day increased slightly to 2.8 million barrels over the four-week period ending January 20, up from a revised 2.79 million barrels during the previous four-week period.
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Although the volume of shipments to India appears to have declined, history shows that most of the cargoes on ships that initially have no final destination end up there.
Almost 650,000 barrels of oil a day are being transported on vessels headed to Port Said or Suez, or that are expected to be transferred from one ship to another at the South Korean port of Yeosu. These voyages typically end at ports in India, and are shown on the chart below as “Unknown Asia” until a final destination becomes apparent.
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The "Unknown" volumes of oil, totaling 434,000 barrels per day, are those on tankers without a specified destination. Most of these cargoes are bound for Asia, but some could end up in Turkey. An increasing number are being transferred from one vessel to another in the Mediterranean, likely for onward journeys through the Suez Canal or on larger vessels around Africa.
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The four-week moving average of crude shipments from all Russian ports has increased in recent months. This is due to the fact that Russia has been ramping up its crude production in order to meet global demand.
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Russia's seaborne crude exports to European countries have declined in recent months, falling to 125,000 barrels a day in the 28 days to Jan. 20. This is the lowest level since Bloomberg began tracking the flows in detail at the start of 2022. These figures do not include shipments to Turkey.
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A market that consumed more than 1.5 million barrels a day of short-haul crude has been lost almost completely, to be replaced by long-haul destinations in Asia that are much more costly and time-consuming to serve.
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The average crude shipment from Russia to Europe takes four weeks.
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No Russian crude was shipped to northern European countries in the four weeks to Jan. 20. This is the first time since November that no Russian crude has been shipped to this region.
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The average crude shipment from Russia to northern Europe takes four weeks.
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Exports to Mediterranean countries rose to their highest in five weeks on a four-week average basis. Turkey was the only destination for Russian seaborne crude into the Mediterranean and the country is one of those that boosted imports after the war began. The pick-up in purchases will provide some relief for the Kremlin, though flows remain well below the levels seen in the summer of 2022.
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The average number of shipments to Mediterranean destinations over a four-week period.
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Flows of crude oil to Bulgaria, Russia's only Black Sea market, have fallen to their lowest level since August, dropping to 125,000 barrels a day. However, Bulgaria has secured a partial exemption from the EU's embargo on Russian oil, which should support inflows now that the embargo is in force.
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The average flow of goods to Black Sea destinations over a four-week period was steady, with no significant changes noted.
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Russian crude oil exports fell by 820,000 barrels per day, or 22%, in the seven days to January 20. This reverses most of the gains seen in the previous week. The biggest drops were seen in shipments from Pacific ports, with smaller decreases in exports from Arctic and Black Sea ports. Baltic exports were unchanged.
Figures for Russian crude oil exports do not include volumes from Ust-Luga and Novorossiysk that are classified as Kazakhstan's KEBCO grade.
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Russia is one of the world's leading crude oil exporters, with shipments originating from a number of different ports. The majority of Russia's seaborne crude oil exports come from the Black Sea port of Novorossiysk, followed by the Baltic Sea port of Primorsk. Other important export ports include Vladivostok, Nakhodka, and Murmansk.
Inflows to the Kremlin's war chest from its crude-export duty fell sharply in the seven days to Jan. 20, dropping by $13 million, or 22%. The four-week average income also fell, dropping by $18 million to $69 million.
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The Kremlin's revenue from export duty on Russia's crude shipments has been declining in recent years.
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The January duty rate for Russian oil is $2.28 per barrel, based on an average price of $57.5 per barrel for the Urals grade. This figure is set to fall further next month, with the February duty rate set at $1.75 per barrel. This will be the lowest per barrel rate since June 2020, during the depths of the Covid 19 pandemic. The drop is the result of a decline in Urals prices over the mid-December to mid-January measurement period. According to figures from the Russian Ministry of Finance, the benchmark grade averaged $46.82 per barrel over this period, a discount of almost $35 per barrel to Brent.
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The charts below show the number of ships leaving each export terminal and the destinations of crude cargoes from the four export regions.
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A total of 28 tankers loaded 20.9 million barrels of Russian crude in the week to Jan. 20, according to vessel-tracking data and port agent reports. That's a decrease of 5.7 million barrels, or 22%, from the previous week. Destinations are based on where vessels signal they are heading at the time of writing, but some may change during the course of the voyage. All figures exclude cargoes identified as Kazakhstan's KEBCO grade.
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A total of 28 tankers loaded with Russian crude oil were reported in the week ending January 20.
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The total volume of crude oil shipped from Baltic terminals in Russia remained stable last week. It's likely that the ports are being used to handle additional volumes of crude that have been displaced from the northern leg of the Druzhba pipeline that serves Poland and Germany.
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Crude oil flows from Primorsk and Ust-Luga on a weekly basis.
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Shipments from Novorossiysk in the Black Sea declined from the previous week's level in the period to Jan. 20, with smaller cargoes predominating.
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Novorossiysk is a major crude oil export terminal in Russia, and every week, a large volume of crude oil is shipped out from the terminal. This crude oil is then transported to various destinations around the world.
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Arctic shipments declined from the previous week's two-month high, with two suezmax tankers leaving from Murmansk during the week. With all cargoes now heading to Asia via the Suez Canal, these larger vessels have replaced the aframaxes that were previously used for deliveries from the floating storage units at the port. The Northern Sea Route to China, used for one cargo in October, is not expected to reopen for several months due to ice.
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Every week, crude oil is shipped from Murmansk to destinations around the world. This oil is vital to many industries and helps to keep the global economy moving. Without these shipments, many businesses would grind to a halt.
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Pacific flows have declined significantly, falling by nearly 50% from the previous week's high. Just six tankers are loading at the region's three terminals.
Shuttle tankers carrying Sokol crude are now often waiting much longer than they used to before transferring their cargoes to other vessels off the South Korean port of Yeosu. This appears to be slowing shipments of the grade, as no vessels were loaded at the De Kastri terminal during the week.
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Each week, crude oil is shipped from Kozmino, De Kastri and Sakhalin Island. This oil is then used to produce a variety of products, including gasoline, diesel and other fuels.