Russia’s crude exports hit three-month high amid refinery maintenance

(Bloomberg) - Russia’s crude shipments rose to the highest in three months, with more oil available for export after the country’s refineries embarked on seasonal maintenance.

Four-week average cargoes grew by about 60,000 bpd in the week to Oct. 6, reaching the highest since early July. Russia’s oil processing during most of September fell to the lowest since June amid works at plants nationwide, a trend that continued in the early days of this month.

The increase in four-week flows came despite shipments from Baltic and Asian ports dropping over a seven-day period. Crude production dipped below the country’s OPEC+ target last month, Moscow said.

The gross value of Russia’s crude exports slipped to $1.54 billion in the seven days to Oct. 6, from $1.68 billion in the period to Sept. 29. The drop in weekly shipments was partly offset by gains in average prices for Russia’s crude, which were lifted by a broader increase in global benchmarks amid market worries that the deepening conflict between Iran and Israel could disrupt Middle East supplies.

Seaborne crude

The Russian state’s oil revenue showed a small annual increase in September, which came at the expense of the country’s oil producers. The government offset weaker energy prices by halving monthly subsidies to the nation’s crude producers. Oil remains a key source of funds for the Kremlin as it seeks to withstand Western sanctions and cover the growing military cost of the invasion of Ukraine.

Crude shipments

A total of 31 tankers loaded 23.58 MMbbl of Russian crude in the week to Oct. 6, vessel-tracking data and port-agent reports show. The volume was down from 26.17 MMbbl on 35 ships the previous week.

Tankers loading crude at Russian terminals

Russia’s seaborne daily crude flows in the week to Oct. 6 fell by about 370,000 bbl to 3.37 million, giving up nearly half of the previous week’s gain.

In contrast, the less volatile four-week average edged higher, increasing by 60,000 bbl a day to 3.32 MMbpd, up from 3.26 MMbbl the previous week.

Crude shipments so far this year are about 50,000 bpd, or 1.4%, below the average for the whole of 2023.

Two cargoes of Kazakhstan’s KEBCO crude were loaded at Novorossiysk on the Black Sea and one at Ust-Luga on the Baltic during the week.

Russia's seaborne crude

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 MMbpd 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 bpd below the country’s target, after taking account of the deeper compensation cut it agreed to make last month.

Export value

The gross value of Russia’s crude exports fell to $1.54 billion in the seven days to Oct. 6, from $1.68 billion in the period to Sept. 29. The big drop in weekly flows was partly offset 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 rising 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 $1.50 a barrel, while shipments from the Black Sea rose by about $2 a barrel. Prices for key Pacific grade ESPO rose by about $1 compared with the previous week. Delivered prices in India were also up, rising by about $2.10 a barrel, all according to numbers from Argus Media.

Four-week average income rose slightly, increasing to about $1.47 billion a week, from $1.46 billion in the period to Sept. 29. 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

Observed shipments to Russia’s Asian customers, including those showing no final destination, were steady at 3.14 MMbpd in the four weeks to Oct. 6. That’s about 3% below the average level seen during the recent peak in April.

Russia's Asian customers

About 1.31 MMbpd of crude was loaded onto tankers heading to China. The Asian nation’s seaborne imports are boosted by about 800,000 bpd of crude delivered from Russia by pipeline, either directly, or via Kazakhstan.

Flows on ships signaling destinations in India averaged 1.49 MMbpd, down from a revised 1.53 MMbpd for the period to Sept. 29.

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 230,000 bpd 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 100,000 bpd in the four weeks to Oct. 6, 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.

Crude shipments to Asia

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 bpd 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 bpd.