The most significant decline in Russia's seaborne crude exports since January 2024 occurred as a result of major purchasers avoiding Moscow's oil due to the most recent US sanctions. Oil on the sea has surged, making cargo discharges even more severely impacted than loadings.
According to vessel tracking data compiled by Bloomberg, four week average volumes from the nation's ports were 3.58 million barrels per day till November 2. This is around 190,000 less than the corrected number for the period ending on October 26. Compared to more erratic weekly numbers, which also declined, the average offers a clearer picture of underlying trends.
Following a US restriction on transactions with the nation's two largest producers, Rosneft PJSC and Lukoil PJSC, Moscow's oil revenue dropped to its lowest level since August as a result of the decline in flows. For the time being at least, refiners in China, India, and Turkey are delaying the acquisition of sanctioned cargoes in favor of alternate sources.
Although refiners are less inclined to accept the cargoes into their storage tanks, Russian exporters are nonetheless loading oil aboard tankers. According to tanker tracking data published by Bloomberg, this has caused the volume of Russian crude at sea to climb to more than 380 million barrels, up by 27 million barrels, or 8%, since the beginning of September.
Over 95% of Russia's seaborne oil exports are consumed by China, Turkey, and India collectively, making it nearly impossible to make up for any sizeable decline in their purchases.
Even if the cargoes stay in floating storage, Moscow will probably want to keep loading them for as long as possible. As a result, oil stored at sea will become a more significant indicator of the effects of the most recent sanctions.
The CEOs of major European oil companies cautioned that the restriction on doing business with Russian enterprises, which now includes its four largest crude exporters, will affect global oil supplies and possibly reduce the magnitude of any glut next year.
Purchases of over a million barrels of Russian crude per day are being halted by a number of major Indian oil refiners, at least until solutions are discovered.
Crude that is scheduled to start loading at Russian ports this month is anticipated to have an impact on deliveries for December and January. India's state run refineries are debating whether they may keep accepting some shipments from smaller vendors rather than the sanctioned Russian energy behemoths.
Similar actions are being taken by Chinese refiners. According to Rystad Energy AS, state owned processors Sinopec and PetroChina Co. have canceled certain Russian cargoes in response to the US sanctions.
The buyers caution is expected to impact up to 45% of China's total seaborne oil imports from Russia, or roughly 400,000 barrels per day. The action may have an impact on Russia's important ESPO grade, which is transported from refineries in northern China to the Pacific port of Kozmino in a matter of days.
The third largest consumer of Russian crude, refiners in Turkey, have also begun to reduce their purchases, looking for substitute supplies from other short haul sources like Iraq, Libya, Saudi Arabia, and Kazakhstan.
However, some believe that the disruption will only last temporarily. Torbjörn Törnqvist, the CEO of Gunvor Group, stated in an interview on Tuesday that "more and more of the disrupted Russian oil, one way or another, finds its way to the market down the line." "Somehow, it always does."
According to port agent reports and vessel-tracking data, 26 tankers loaded 21.11 million barrels of Russian crude in the week ending November 2. The amount was lower than the previous week's corrected 26.41 million barrels on 34 ships.
In the week ending November 2, shipments fell to 3.02 million barrels per day on average, the lowest level in ten weeks. During the week, two shipments of Kazakhstan's Kebco grade were transported from Novorossiysk and Ust-Luga.
The only port with steady flows was De Kastri, which is connected to the Sakhalin 1 project. Shipments were down from every region.
In the 28 days leading up to November 2, Moscow's gross value of exports decreased by almost $90 million to $1.36 billion per week on a four-week average, with both export numbers and prices declining.
By using this metric, the export prices of Russian Urals from the Black Sea and Baltic both decreased by almost $0.60 per barrel to $51.79 and $51.42, respectively.
For a second week, the price of Pacific ESPO crude fell by $0.80 to an average of $59.20 per barrel, staying below the $60 G-7 price cap. According to data from Argus Media, delivered prices in India also decreased, dropping by $0.60 to $62.13 a barrel.
In the seven days leading up to November 2, the average weekly value of exports was around $1.15 billion, a 27% decrease from the updated number for the period ending on October 26.
Shipments to Russia's Asian clients, including those with no final destination, decreased from a revised 3.39 million barrels per day in the period ending October 26 to 3.26 million barrels per day in the 28 days leading up to November 2.
Although there seems to be a sharp decline in the amount of Russian oil going to China and India, there are still significant amounts on ships that do not yet have a final destination, which might reverse the trend.
Even after mooring to discharge, some tankers never display a definitive destination, and more and more are reporting no destination until they are well across the Arabian Sea.
In the four weeks leading up to November 2, tanker flows signaling Chinese ports dropped to 970,000 barrels per day, while the amount headed for India dropped to 940,000 barrels per day from a revised 1.16 million barrels per day in the period ending on October 26. However, there are more than 1.3 million barrels each day on ships that do not yet have a final destination.
Of that, an additional 140,000 barrels per day are on tankers that have not yet indicated a destination, and approximately 1.2 million barrels per day are on ships from Russian western ports that indicate their destination as Port Said or the Suez Canal, or those from Pacific ports with no obvious delivery location.
Almost all of those shipments have already ended up in China or India, but stricter US sanctions might keep the oil on the water until the Russian sellers find a way around them.
In the four weeks leading up to November 2, flows to Turkey dropped to roughly 320,000 barrels per day. There were still no shipments to Syria.
It is challenging to predict flows before ships arrive off the port of Banias because tankers transporting Russian petroleum to the east Mediterranean country seldom broadcast their destination and typically vanish from computerised tracking systems when they are south of Crete.
