(Bloomberg) -- Fuel oil exports from Russia are on track to jump in September to the highest since Vladimir Putin’s invasion of Ukraine in February 2022.
Russia is one of the top exporter of fuel oil, often used in ships, power plants and for reprocessing at refineries. The nation’s seaborne flows plummeted soon after the US banned Russian imports in the wake of the invasion. The European Union subsequently declared an embargo on seaborne imports of Russian fuels from February of last year.
However, Russia’s exports of the product are expected to climb to about 852,000 barrels a day this month, according to data compiled by Bloomberg from analytics firm Vortexa Ltd. If all the planned cargoes sail by month-end, the volumes will reach the highest since the war began and several traders rushed to exit Russian operations.
Fuel oil is a lower-value product that is left over after refineries make more valuable ones like gasoline and diesel. Russian refining rates have plummeted in recent weeks amid autumn maintenance season, coupled with unplanned shutdowns at some refineries. Muted activity at so-called secondary units at refineries that normally reprocess fuel oil — may have freed up more supply for exports.
The high Russian fuel oil exports are “likely to be a direct consequence of refinery operations in Russia and especially secondary unit outages,” said Pamela Munger, a senior market analyst at Vortexa, an analytics firm. Seaborne exports have risen month on month, “indicative of higher secondary units going on turnaround,” she said.
The bulk of this month’s shipments are heading to Asia, including high levels of fuel oil that’s low in sulfur. Tight supplies the fuel have lifted the region’s profit margins from processing it, according to a report from Vortexa.
More Russian fuel oil supplies are expected to head toward Asia in the coming months, keeping a lid on fuel oil cracks, the firm said.
READ: Russia’s Oil Flows Slump, Driving Earnings to an Eight-Month Low
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