Russian Product Flows Still High Despite Sanctions

Six weeks after the EU embargo kicked in, Russia’s refined products are departing the country’s ports in large volumes — and mooring in record quantities in North Africa, the Middle East and Asia. Securing sufficient vessels, long believed to be Russia’s biggest obstacle under Western sanctions, has apparently not posed a problem. However, shipping data suggest there is about 700,000 barrels per day of March product cargoes without a destination, on top of 200,000 b/d of stranded February-loaded cargoes. But this massive “surplus at sea” might be a risk Russian refiners feel is justified ahead of spring maintenance and peak summer consumption at home, a season when exports decline. Given the shortage in domestic storage infrastructure, the emphasis right now is on moving products out the door. Data from ship-tracker Kpler show that products exports in the first three weeks of March amounted to 3.1 million b/d, up a considerable 600,000 b/d from February and 500,000 b/d from average levels last year. Refining throughput is around 5.65 million b/d this month, down a fraction from February, and since the domestic market typically absorbs only half of output, there is product galore to ship abroad. Official data seen by Energy Intelligence show that diesel exports in the first two weeks of March were 780,000 b/d, a 140,000 b/d gain on February, but down 6% from the highs seen in December-January ahead of the EU ban.