(Bloomberg) -- Russia’s seaborne crude exports jumped to the highest in three months in the week to Oct. 1, lifting four-week average flows to a level that’s broadly in line with the country’s pledge to reduce overseas shipments.
About 3.72 million barrels a day of crude was shipped from Russian ports last week, a 24% increase from the previous seven days and the highest since the week ending July 2, tanker-tracking data monitored by Bloomberg show. That lifted the less volatile four-week average to about 3.3 million barrels a day.
The jump came after maintenance work disrupted flows from two key ports over the previous weeks, with shipments curtailed first from Kozmino on the Pacific coast and then from Primorsk on the Baltic.
Deputy Prime Minister Alexander Novak said in early August that the Kremlin would prolong export restrictions, while tapering the cut to 300,000 barrels a day from September until the end of the year, down from 500,000 for the previous month. The baseline for the reduction was average exports in May and June — when seaborne volumes hit new highs. Bloomberg calculations indicate that shipments through ports should be running now at about 3.28 million barrels a day.A combination of soaring exports and rising prices have boosted the Kremlin’s revenues from oil export duties, which set a new year-to-date high last week and rose to the most since mid-January on a four-week average basis.
While crude exports have rebounded strongly, Russia has temporarily halted overseas shipments of gasoline and diesel to tame surging pump prices at home. Shipments are expected to resume once the government and oil companies come up with a mechanism to ensure adequate supplies to local buyers. “If the situation doesn’t change, strict regulatory measures will be taken, comparable to those in force on the fertilizer market,” Novak said.
Russia consumes only about half the diesel it produces, so a prolonged export ban could cause stockpiles to swell, requiring refiners to cut runs, which could in turn boost crude exports, or curtail crude production.
Russia’s oil refiners reduced daily processing rates in September to the lowest since May amid seasonal maintenance. Works are set to continue for the next several weeks, with the peak of offline capacities seen to last until mid-October.
Flows by Destination
Russia’s seaborne crude flows rebounded in the period to Oct. 1 on a four-week average basis to 3.3 million barrels a day, up from 3.2 million barrels a day in the period to Sept. 24. Shipments remain about 540,000 barrels a day below the highs seen between April and June.
All figures exclude cargoes identified as Kazakhstan’s KEBCO grade. Those are shipments made by KazTransoil JSC that transit Russia for export through Novorossiysk and the Baltic port of Ust-Luga.
The Kazakh barrels are blended with crude of Russian origin to create a uniform export grade. Since Russia’s invasion of Ukraine, Kazakhstan has rebranded its cargoes to distinguish them from those shipped by Russian companies. Transit crude is specifically exempted from European Union sanctions.
Observed shipments to Russia’s Asian customers, including those showing no final destination, edged higher to 2.76 million barrels a day in the four weeks to Oct. 1, from a revised 2.66 million barrels a day in the period to Sept. 24.
Even if all of the cargoes on ships without an initial destination eventually end up in India, shipments to the country will still be about 530,000 barrels a day, or 25%, down from their peak in May.
Adding the “Unknown Asia” and “Other Unknown” volumes to the total for India gives a figure of 1.62 million barrels a day in the four weeks to Oct. 1, down from a high of 2.15 million barrels a day in the period to May 21.
The equivalent of 235,000 barrels a day was on vessels signaling Port Said or Suez in Egypt, or which are expected to be transferred from one ship to another off the South Korean port of Yeosu. Those voyages typically end at ports in India or China and show up in the chart below as “Unknown Asia” until a final destination becomes apparent.
The “Other Unknown” volumes, running at 208,000 barrels a day in the four weeks to Oct. 1, are those on tankers showing no clear destination. Most of those cargoes originate from Russia’s western ports and go on to transit the Suez Canal, but some could end up in Turkey. Others could be moved from one vessel to another, with most such transfers now taking place in the Mediterranean.
Russia’s seaborne crude exports to European countries were unchanged at 183,000 barrels a day in the 28 days to Oct. 1, with Bulgaria the sole destination. These figures do not include shipments to Turkey.
A market that consumed about 1.5 million barrels a day of short-haul seaborne crude, coming from export terminals in the Baltic, Black Sea and Arctic has been lost almost completely, to be replaced by long-haul destinations in Asia that are much more costly and time-consuming to serve.
No Russian crude was shipped to northern European countries in the four weeks to Oct. 1.
Exports to Turkey, Russia’s only remaining Mediterranean customer, were stable at about 235,000 barrels a day in the four weeks to Oct. 1. Flows had topped 425,000 barrels a day in October, before falling sharply after a Group of Seven price cap came into effect in early December.
Flows to Bulgaria, now Russia’s only Black Sea market for crude, were unchanged at 183,000 barrels a day, the third week they have remained at that level. That’s almost three times as much as the country was importing at the lowest points between March and May and equal to the highest levels seen since June 2022. That increase in imports has come despite Bulgarian lawmakers recently approving a motion to end Bulgaria’s dependence on Russian crude sooner than permitted under a European Union import ban.
Flows by Export Location
Aggregate flows of Russian crude jumped to a three-month high of 3.72 million barrels a day in the seven days to Oct. 1. The end of maintenance work at Primorsk allowed Moscow to take full advantage of easing back on the export cut it implemented in July.
Figures exclude volumes from Ust-Luga and Novorossiysk identified as Kazakhstan’s KEBCO grade.
Vessel-tracking data are cross-checked against port agent reports as well as flows and ship movements reported by other information providers including Kpler and Vortexa Ltd.
Inflows to the Kremlin's war chest from its crude-export duty jumped to $77 million in the seven days to Oct. 1, while four-week average income rose to $68 million. The weekly figure was the highest this year, while the four-week average was bigger than any since mid-January. Rising oil prices and the rebound in flows are both contributing to the increase in receipts.
Russia’s government calculates oil taxes — including export duty — using a discount to global benchmark Brent, which sets the floor price for the nation’s crude for budget purposes. If Russian oil trades above that threshold, the Finance Ministry uses the market price for tax calculations, as has been the case in recent months. The discount used to calculate taxes including export duty is set at $20 a barrel for September and subsequent months.
The duty rate for October has been set at $3.26 a barrel, based on an average Urals price of $77.03 during the calculation period between Aug. 15 and Sept. 14. That was $11.60 a barrel below Brent over the same period. October’s duty rate sets a new high for the year.
The following charts show the number of ships leaving each export terminal and the destinations of crude cargoes from the four export regions.
A total of 34 tankers loaded 26 million barrels of Russian crude in the week to Oct. 1, vessel-tracking data and port agent reports show. That’s up 5.1 million barrels from the previous week.
A rebound in shipments from the Baltic port of Primorsk following the completion of maintenance work the previous week and a jump in shipments from Murmansk in the Arctic drove the increase.
Destinations are based on where vessels signal they are heading at the time of writing, and some will almost certainly change as voyages progress. All figures exclude cargoes identified as Kazakhstan’s KEBCO grade.
The total volume on ships loading Russian crude from the Baltic terminals rebounded from a five-week low, jumping back above 1.5 million barrels a day. Maintenance work at Primorsk had reduced the number of tankers loading at the port in the week to Sept. 24 to just four, half the number seen in the seven days to Oct. 1.
Shipments of Russian crude from Novorossiysk rose to a four-week high of about 540,000 barrels a day.
No cargoes of Kazakh crude were loaded at the port during the week, down from one during the previous seven days.
Four Suezmax tankers completed loading cargoes at the Arctic port of Murmansk in the week to Oct. 1, boosting flows to equal a record set back in mid-May.
Three tankers were drifting outside the port waiting to load at the end of the week.
Ten tankers loaded at Russia’s three Pacific export terminals, down by two from the previous week. The volume of crude shipped from the region fell back from a four-week high of 1.24 million barrels a day seen the previous week.
The drop in flows was driven by fewer shipments of the Sokol grade from the terminal at De Kastri and a lack of any tankers completing loading of Sakhalin Blend crude. Shipments from the Sakhalin Island terminal are running at one every other week.
The volumes heading to unknown destinations are Sokol cargoes that are currently being shuttled to an area off the South Korean port of Yosu from the loading terminal at De Kastri. Most of these are ending up in India.
Note: This story forms part of a weekly series tracking shipments of crude from Russian export terminals and the export duty revenues earned from them by the Russian government. Weeks run from Monday to Sunday. The next update will be on Tuesday, Oct. 10.
Note: All figures exclude cargoes owned by Kazakhstan’s KazTransOil JSC, which transit Russia and are shipped from Novorossiysk and Ust-Luga as KEBCO grade crude.
If you are reading this story on the Bloomberg terminal, click here for a link to a PDF file of four-week average flows from Russia to key destinations.
--With assistance from Sherry Su.
©2023 Bloomberg L.P.
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