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Russian Export Outage Holds Steady

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Russian exports of crude and refined products are still being shunned by many buyers, but oil is still making its way to market, according to Energy Intelligence analysis of shipping and other data.

Based on declining volumes for oil tanker fixtures from Russia after Mar. 10, we estimate that the Russian supply shortage stands at 2.97 million barrels per day — 1.66 million b/d of crude and 1.31 million b/d of products.

The volume affected by sanctions and other factors remained broadly stable compared with estimates earlier in the week.

Expectations that the outage could soon rise to 5 million b/d have not yet transpired, but evidence of problems continues to grow.

Notably, the volume of Urals floating at sea has doubled from an average 12.8 million bbl so far in 2022 to 25 million bbl in the week ended Mar. 11, according to data from analytics firm Kpler. Some of those cargoes have no buyer.

Russia normally exports about 4.7 million b/d of crude and 2.8 million b/d of products, according to government data.

Europe: Fewer Fixtures

Russian seaborne oil exports this week are estimated at 2.68 million b/d. That comprises loadings from the Baltic ports of Primorsk and Ust-Luga, the Black Sea port of Novorossiysk, and the Pacific port of Kozmino in the Far East.

Crude flows this week via the Druzhba pipeline to Central Europe and to China via the Skovorodino-Daqing spur reportedly remain steady, at 754,000 b/d and 586,000 b/d, respectively.

The total number of reported crude tanker fixtures from Russia’s Baltic and Black Sea ports for the whole month of March is currently 27, representing an average 1.97 million b/d of oil exports.

Only 12 of these fixtures are set for dates after this week, including two bookings from Novorossiysk to India, and one charter with no destination yet.

As of Mar. 11, there were not enough vessels booked to lift the full Russian March crude export program, and some of the fixed cargoes may not have a buyer.

The majority of fixtures are destined for the UK and Europe where, despite tougher financial sanctions and US and UK bans on Russian oil, some cargoes of Russian oil are still landing.

Russian oil “is definitely flowing, away from all the headlines,” a Middle East oil trader commented this week.

Poland's largest refiner PKN Orlen, for example, said that it needs to keep buying Russian crude for operational continuity and for the country’s energy security.

Espo Loadings Normal

In Asia, shipments of East Siberia-Pacific Ocean (Espo) Blend crude from Kozmino are operating at normal levels of one cargo per day, or around 750,000 b/d.

Most of these barrels are going to ports in China, including the Dongjianjou and Panjin terminals, while occasional shipments have landed in Japan.

According to port data, the main Espo lifters are international traders, led by Trafigura and Vitol, both of which market crude produced by state-controlled giant Rosneft and privately owned Surgutneftegas.

Another regular lifter is Paramount Energy, a small Geneva-based operator that picks up the barrels of small Russian producers. Some crude is going directly to Chinese end-users, principally ChemChina and Unipec.

There is also a steady stream of crude coming out of the De Kastri terminal in the Far East, which services the Sakhalin-1 project, which is operated by Exxon Mobil and also includes Rosneft and India’s ONGC.

Exxon, which said last week it would start taking steps to exit Sakhalin-1, is still lifting crude from De Kastri, according to shipping data.

The data shows Exxon lifting two 720,000 bbl cargoes so far this month, both heading to the Yosu terminal in South Korea. It is due to lift one more before the end of the month.

Anecdotal evidence continues to suggest that some Asian buyers are shunning Russian oil.

On Mar. 10, ONGC did not receive any bids for a sell tender in Asia offering 700,000 bbl of Russian Sokol light, sweet crude, despite the market’s recent thirst for sweet barrels.

Upstream Clogs

Energy Intelligence estimates the scale of the Russian outage based on data and assessments of exports, shipping fixtures, sales and deliveries.

As the disruption continues, and given limited storage capacity in Russia, unsold volumes will start to clog the system and feed back upstream.

The UK’s Oxford Institute for Energy Studies predicts that Russia will see production falling by 3.2 million-4 million b/d as soon as April.

Topics:
Oil Supply, Oil Tankers, Crude Oil, Military Conflict, Sanctions, Ukraine Crisis
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