Russian Exports: Seaborne Products Shipments Surge

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  • Russia’s exports of petroleum products by sea are up by over 500,000 barrels per day in March as ports disgorge bottlenecked February cargoes, and refineries maintain high output levels ahead of maintenance.
  • In the two months since the EU embargo went into effect in early February, total products exports are up 150,000 b/d from the average level in 2022.
  • North Africa and Turkey are soaking up Russian diesel, while Asia and the Middle East are taking more "dirty" products such as fuel oil.
  • Exports are expected to decline in April-May as refineries head into maintenance season. Cargoes now stranded at sea also indicate congestion.

Russia’s product exports are poised to reach a post-war high of 3.1 million-3.2 million barrels per day this month thanks to a surge in seaborne exports. Those are now just over 3 million b/d, based on shipping data for Mar. 1-23, up from 2.5 million b/d in February.

Shipments out of the Black Sea are up by 50% so far this month to 1.2 million b/d after February storms had brought activity to a halt for several days.

In terms of destinations, Russia’s products are getting snapped up in Asia, the Middle East and Africa, and several cargoes have made their way across the Atlantic.

However, not all the volumes are finding a home: Shipping data indicate there are some 650,000 b/d of March-loaded products at sea without a destination. Given the long, pricey voyages, this overhang raises questions about how long Russia can sustain these high export levels.

Strong Quarter

The first quarter of 2023 is shaping up to be a banner one for Russia’s exports of refined products. Average exports for the three months are poised to reach 2.9 million b/d, a 150,000 b/d increase on 2022 and 50,000 b/d on 2021.

Seaborne exports of 3 million b/d in the first 23 days of March are 380,000 b/d higher than the average last year.

Diesel exports, according to official data seen by Energy Intelligence, are averaging 745,000 b/d so far this year, up nearly 50,000 b/d from average 2022, while diesel production has grown by 75,000 b/d over the same period to 1.81 million b/d.

Exports of heavy fuel oil, which Russia produces in abundance due to a low conversion capability at its refining fleet, the world’s third largest, averaged 612,000 b/d in January-February, official data show, up 40,000 b/d from 2022.

Rail exports, meanwhile, are underperforming due to congestion on Russian tracks — caused mainly by a surge in coal shipments — and a lack of tank cars for light products. Analysts say oil companies can no longer guarantee delivery times for long-distance cargoes, and some have even paid a fine for non-delivery and sold the product elsewhere, one source familiar with the situation told Energy Intelligence.

Still, all signs indicate that Russia will in coming months export more product by rail to places such as Iran, Central Asia, Pakistan and North Korea.

Migration in Action

The great migration of Russian fuels is underway, and the volumes now shunned by Europe are sailing far and wide across the globe.

If Europe used to import 500,000-550,000 b/d of Russian ultra-low sulfur diesel (ULSD), that has now dropped to zero. Turkey and North Africa have emerged as the biggest buyers, with the latter overtaking the former in March. Countries like Morocco, Tunisia and Libya were listed as importers of 242,000 b/d of diesel in the first three weeks of this month, up from 10,000 b/d in March 2022. Turkey is slated to import around 150,000 b/d, roughly its average offtake over the past four months. In February it imported nearly 200,000 b/d.

Western Africa is identified as the importer of about 50,000 b/d of diesel so far this month, according to shipping data, while Brazil is marked as destination for 100,000 b/d that have left Russian ports, up from 65,000 b/d in actual February deliveries — and half of the 200,000 b/d that former President Jair Bolsonaro once said the country could take.

Finally, India is scheduled to receive what is apparently its first ever cargo of Russian ULSD — one that was loaded in the Baltic Sea port of Primorsk on Mar. 21. This is noteworthy given that India is a major products exporter and stands to benefit from the EU ban on Russian products.

Importantly, shipping data as of Mar. 24 indicate there is approximately 130,000 b/d of March-loaded diesel exports without a destination.

Trends with fuel oil exports are no less striking. If in pre-embargo times Europe used to import over 500,000 b/d of fuel oils, those too have been reduced to zero.

Asia, meanwhile, is soaking up these "dirty" products. In February, Asia was scheduled to receive 520,000 b/d of fuel oils, while March shipments to the region, as of Mar. 24, were seen at 500,000 b/d. This compares to an average 340,000 b/d in 2022.

The Middle East has become a major buyer of Russian fuel oils, particularly United Arab Emirates, since June 2022, averaging some 170,000 b/d of imports since that month. By comparison, in 2021 these imports to the region were only 85,000 b/d.

For more coverage of the Ukraine crisis, visit Ukraine Crisis: Energy Impact >

Oil Trade, Oil Products, Diesel/Gasoil, Ukraine Crisis
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