Save for later Print Download Share LinkedIn Twitter After three weeks of murkiness and confusion, Russian oil exports appear to have been disrupted less than previously thought, with global trading firms stepping in to pick up distressed cargoes. Russia's Feb. 24 invasion of Ukraine threw the oil market into chaos as buyers started to shun cargoes, amid concerns about sanctions and damage to their reputations.Shipping data, canceled tenders and discussions with traders had all pointed to a major disruption in the early phase of the war.Energy Intelligence initially estimated that Russia's oil exports had contracted by 2.5 million barrels per day — 1.5 million b/d of crude and 1 million b/d of refined products — a number that was later revised upwards to 3 million b/d.However, as the dust starts to settle, it has become clear that the political and economic backlash against Russia has not triggered a sharp fall in its oil exports — at least for the time being.Instead, the trade in Russian oil shipped from Baltic and Black Sea ports — totaling close to 2 million b/d — has increasingly gone "dark." More cargoes are leaving those ports before a final buyer has been found for them. And in other cases, the identity of the buyer, the destination and the price has not been disclosed.Combined exports of crude and products currently appear to be running at close to normal levels, with the Baltic ports at 1.55 million b/d and the Black Sea at 325,000 b/d. But much of this oil is going into storage rather than to a refinery buyer. Huge DiscountsTraders are still talking about a big drop in export flows in the near future, based on a dearth of tanker fixtures for the coming weeks. But it’s also possible that the recent trend could continue, with traders — rather than end-users — quietly snapping up cargoes at the last minute and few details emerging about such transactions.Some Russian crude is still going as planned to refineries in Poland, Finland, France, Bulgaria or Croatia. But most of it is going into commercial storage tanks — much of it in Rotterdam, the Netherlands. What happens to that oil afterwards is almost impossible to track.Transferring cargoes into storage outside Russia is allowed under current sanctions, and this facilitates under-the-radar sales later. Traders warehousing oil like this are under no pressure to resell it, because they have purchased it at such huge discounts they can hold it for months and still make money.Recent spot offers for Russia's Urals crude have involved discounts of up to $30 per barrel versus benchmark dated Brent, compared with normal pre-war levels of around $2.The current practices are still creating some shortages, and some refiners are still scrambling to find replacements for Russian oil, exacerbating recent tightness in the market and bidding up prices for alternative spot grades. Urals cargoes "are sailing out of the Baltics but I am convinced many are unsold," said one trader. "After the Shell debacle, no one wants the bad press," another trader noted — a reference to publicity around Shell's purchase of a cargo of Urals that prompted the company to pledge it would stop buying spot cargoes and phase out contracted purchases of Russian crude. “There is nothing illegal with this, but the world is judging any public deals,” the trader added. Private and ConfidentialAll transactions involving Russian crude are now "private and confidential" — a term used by oil traders to refer to sensitive deals. Traders say exports of refined products from Russia have also held up well during the first weeks of the war, but this market is even harder to track.Illustrating the current lack of transparency, there are just two known tanker fixtures for Russian crude exports in the Baltics after Mar. 15. Research firm Kpler said in a note that "forward-looking data suggests that crude oil imports from Russia should start to slow down over the course of this week, giving real substance to the market talk of self-sanctioning behavior."The number of Russian crude cargoes offered in the Platts trading window, a key pricing platform, has also slowed to a trickle.On Monday trader Glencore was offering a single Urals cargo loading in the Baltic ports of Primorsk/Ust-Luga on Mar. 29-Apr. 2 at a discount of $30.15/bbl to dated Brent. But there were no takers.It's likely that ships are being lined up for spot cargoes on the quiet, avoiding the relative transparency of a fixture arranged through a shipbroker. Traders can also use time-charter vessels that they can direct to Russia or vessels from their own fleets, both of which have less public visibility.Sellers like Surgutneftegas — whose normally popular tenders drew no bids earlier this month — are thought to be selling oil directly to trading houses.The trade could still become even more obscure. "I think we'll start seeing STS [ship-to-ship transfers] soon, like offshore Malaysia, because the discounts are so big now that you can justify it," said one trader.Ship-to-ship transfers have been used over the last few years to disguise the true origin of Iranian crude, which is subject to US sanctions."Soon, I think, ships will start turning off transponders," the trader added, referring to the automated signals that show a vessel's location — often with additional information such as the destination and the type of cargo.Traders Step Up ActivityKpler data shows that since early March, international traders like Trafigura, Gunvor and Vitol — all of which have long-standing business ties to Russia — have stepped up their activity, taking over as other lifters of Russian crude have dropped out. French major TotalEnergies chartered six vessels to pick up crude in the first half of March, mostly for storage in Rotterdam but with one going to its refinery in Le Havre.In the first two weeks of March, loadings from Russia's Baltic ports showed one cargo going to Porvoo in Finland, one to Omisalj in Croatia, and two to Gdansk in Poland.Three cargoes from the Black Sea went went to India, one to Constanta, Romania, and one to Burgas, Bulgaria.Norway's Equinor said this week that it would stop trading Russian oil, but would still take delivery of four cargoes this month because of prior contractual commitments. Two of the Equinor cargoes were resold to Asian buyers, a third was to be delivered into storage, and a fourth was bound for the company's Mongstad refinery. As well as Rotterdam, cargoes from Russia's Baltic and Black Sea ports were being sent into storage in Wilhelmshaven, Germany, and Trieste, Italy.Tank farms in these areas have pipeline connections to refineries run by major oil companies.Exports of Russian crude to Europe via the Druzhba pipeline system in March are estimated to have run about 200,000 b/d lower than average, at 750,000 b/d. Flows to Asia are running at somewhat higher levels, with exports from the port of Kozmino at the end of the Espo pipeline running at 755,000 b/d in the first half of March — about 50,000 b/d higher than in February, Russia's pipeline to China is running at regular volumes close to 700,000 b/d.