Russia’s Seaborne Oil Exports Surge Despite Sanctions
Bloomberg January 16, 2023
By Julian Lee (Bloomberg) Russia’s seaborne crude exports soared last week to the highest level since April, suggesting that the country has — for now — overcome an initial hit to flows that followed European sanctions.
Aggregate volumes of Russian crude rose by 876,000 barrels a day, or 30%, to 3.8 million in the week to Jan. 13. Baltic shipments were up by 626,000 barrels a day from the previous week, while those from the Black Sea and the country’s Pacific ports also expanded.
The increase also lifted the country’s four-week average, which smooths out peaks and troughs in what are noisy weekly data. The jump in the four-week average was boosted as a mid-December, weather-related slump that saw weekly flows collapse by more than half fell out of the calculation. And the surge in exports by sea has been partly offset by a drop in pipeline flows to Europe, with deliveries to Germany halted since the start of the year.
Inflows to the Kremlin’s war-chest from crude export duties rose much less sharply. All of the shipments in the latest week attracted duty at the low January rate, while several cargoes that were shipped the previous week were taxed at the December rate, which was more than two-and-a-half times as high. That was due in part to a change in the formula used to calculate duty rates, as the country continues its long shift away from taxing exports by increasing the burden on production.
The data are highly volatile, depending on the timings of when individual shipments depart and things like weather conditions and work at ports.
taking an average of 31 days from Baltic ports to India, compared with just seven days from the same terminals to Rotterdam and about half that to Poland. That’s putting more pressure on the dwindling fleet of ships whose owners are willing to haul Russian cargoes.
The country is increasingly reliant on its own ships and a so-called “shadow fleet” of usually older ships owned by small, often unknown companies that have sprung up in recent months. European-owned tankers can still carry Russian crude, as long as it is sold at a price below a $60 a barrel cap, introduced at the same time as the import ban. But fewer are now doing so.
There has also been a resurgence in ship-to-ship transfers of cargoes in the Mediterranean, with cargoes either being combined onto larger vessels or shifted from ice-class tankers onto others in order to free up those ships needed for operations in the Baltic in the winter months.
Transfers have been visible both off the Spanish north African city of Ceuta and off the Greek coast near Kalamata. The VLCC Lauren II has completed the transfer of three 100,000-ton cargoes at Ceuta and the Sao Paulo took two before heading through the Suez Canal. Lauren II is now heading around Africa to Asia. The VLCC Monica S completed a similar maneuver with an aframax off Ceuta on Jan. 14-15, becoming the third supertanker to do an STS of Urals at the site over the past month.
Elsewhere, shuttle tankers that haul Russia’s Sokol crude are waiting much longer than usual to transfer cargoes to other ships off the South Korean port of Yeosu, reducing the number of cargoes they are able to lift each month.
Tankers hauling Russian crude are becoming more cagey about their final destinations. Vessels carrying more than 29 million barrels of Russian crude, the equivalent of 1.05 million barrels a day of exports, left port showing no clear final destination in the four weeks to Jan. 13.
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