Russian Crude Shipments Hit by Storms and Baltic Drone Strike

Julian Lee
·9 min read
2

(Bloomberg) -- Russia’s seaborne crude shipments fell to the lowest in almost two months, undermined by adverse weather and a Ukrainian drone strike that briefly halted flows from a key Baltic export terminal.

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About 3.36 million barrels a day of crude were shipped from Russian ports in the four weeks to Jan. 21, tanker-tracking data monitored by Bloomberg show. That was down by 50,000 barrels a day from the revised figure for the period to Jan. 14.

The more volatile weekly average fell by 340,000 barrels a day to a seven-week low of 3.02 million. Exports were hit by continuing bad weather at some ports and a Ukrainian drone strike on a condensate processing facility adjacent to the Ust-Luga crude export terminal, which interrupted loading on Sunday, pushing one shipment from the week ending Jan. 21 into the following week.

Port maintenance and more poor weather may depress shipments again this week, while the drone attack has opened up a new front in Moscow’s war on Ukraine that highlights the vulnerability of oil exports from Russia’s western ports.

Russia has said it will cut oil exports by 500,000 barrels a day below the May-June average during the first quarter, after several other members of the OPEC+ group agreed to make further output curbs. The Russian cut will be shared between crude shipments, which will be reduced by 300,000 barrels a day, and refined products. The four-week average crude measure was about 220,000 barrels a day below the May-June level.

All Russian crude destined for Asian buyers from western ports continues to pass through the Red Sea, despite attacks on merchant vessels from Yemen-based Houthi rebels. The militants have assured Russia and China that the group is “ready to ensure the safe passage of their ships in the Red Sea.” However, the only oil tanker reported to have been struck off Yemen was carrying Russian crude. The Sai Baba, carrying a cargo of Russian Urals, was hit by a drone off Yemen on Dec. 23, according to a post by the US Central Command on X, formerly known as Twitter.

Russia still appears to be struggling to place cargoes of its Sokol crude. Seventeen cargoes, totaling almost 12 million barrels, are sitting on tankers that appear to be going nowhere. Another two cargoes are on shuttle tankers anchored off the South Korean port of Yeosu, where they are typically transferred to other vessels for onward delivery to India.

The gross value of Russia’s crude exports fell to a five-week low of $1.38 billion in the seven days to Jan. 21 from $1.52 billion the previous week. Meanwhile four-week average income also slipped, down by $25 million to $1.52 billion a week.

Flows by Destination

Russia’s seaborne crude flows in the four weeks to Jan. 21 fell to 3.36 million barrels a day. That was down from a revised 3.41 million barrels a day in the period to Jan. 14. Shipments were about 220,000 barrels a day below the average seen in May and June.

All figures exclude cargoes identified as Kazakhstan’s KEBCO grade. Those are shipments made by KazTransoil JSC that transit Russia for export through Novorossiysk and the Baltic port of Ust-Luga and are not subject to European Union sanctions or a price cap.

The Kazakh barrels are blended with crude of Russian origin to create a uniform export grade. Since Russia’s invasion of Ukraine, Kazakhstan has rebranded its cargoes to distinguish them from those shipped by Russian companies.

Observed shipments to Russia’s Asian customers, including those showing no final destination, edged above 3 million barrels a day in the four weeks to Jan. 21. Flows increased to 3.03 million barrels a day from a revised 2.98 million in the period to Jan. 14, reaching their highest since July.

About 1.19 million barrels a day of crude was loaded onto tankers heading to China in the four weeks to Jan. 21. China’s seaborne imports are boosted by about 800,000 barrels a day of crude delivered directly from Russia by pipeline, either directly, or via Kazakhstan.

Flows on ships signaling destinations in India averaged about 990,000 barrels a day in the four weeks to Jan. 21.

Both the Chinese and Indian figures will rise as the discharge ports become clear for vessels that are not currently showing final destinations.

The equivalent of about 570,000 barrels a day was on vessels signaling Port Said or Suez in Egypt, or are expected to be transferred from one ship to another off the South Korean port of Yeosu. Those voyages typically end at ports in India or China and show up in the chart below as “Unknown Asia” until a final destination becomes apparent. This figure includes nearly 12 million barrels of Sokol crude destined for India that has been stuck on ships since late November.

The “Other Unknown” volumes, running at about 290,000 barrels a day in the four weeks to Jan. 21, are those on tankers showing no clear destination. Most of those cargoes originate from Russia’s western ports and go on to transit the Suez Canal, but some could end up in Turkey. Others could be moved from one vessel to another, with most such transfers now taking place in the Mediterranean, off the coast of Greece.

Europe and Turkey

Russia’s seaborne crude exports to European countries have collapsed since Moscow’s troops invaded Ukraine in February 2022. A market that consumed about 1.5 million barrels a day of short-haul seaborne crude, coming from export terminals in the Baltic, Black Sea and Arctic has been lost almost completely, to be replaced by long-haul destinations in Asia that are much more costly and time-consuming to serve.

Combined flows to Turkey and Bulgaria, Russia’s only two remaining buyers close to its western ports, fell to about 330,000 barrels a day in the four weeks to Jan. 21, tanker-tracking data show. That’s down from about 430,000 barrels a day in the period to Jan. 14 and the lowest since September.

Exports to Turkey fell to a 14-week low of about 308,000 barrels a day in the four weeks to Jan. 21.

Flows to Bulgaria, now Russia’s only European market for crude, were unchanged at about 21,000 barrels a day in the most recent four-week period. That’s the lowest in data going back to the start of 2022. Bulgaria’s parliament has approved a measure that will end imports of Russian oil from March, nine months earlier than permitted under an exemption to EU sanctions on purchases of Moscow's oil. Storms at Novorossiysk continue to hamper shipments across the Black Sea.

No Russian crude was shipped to northern European countries, or those in the Mediterranean in the four weeks to Jan. 21.

Vessel-tracking data are cross-checked against port agent reports as well as flows and ship movements reported by other information providers including Kpler and Vortexa Ltd.

Export Value

Following the abolition of export duty on Russian crude, we have begun to track the gross value of seaborne crude exports, using Argus Media price data and our own tanker tracking.

The gross value of Russia’s crude exports fell to a five-week low of $1.38 billion in the seven days to Jan. 21 from $1.52 billion the previous week. Meanwhile four-week average income also slipped, down by $25 million to $1.52 billion a week. The four-week average peaked at $2.17 billion a week in the period to June 19, 2022. The highest it reached last year was $2 billion a week in the period to Oct. 22.

During the first four weeks after the Group of Seven nations’ price cap on Russian crude exports came into effect in early December 2022, the value of seaborne flows fell to a low of $930 million a week, but soon recovered.

The chart above shows a gross value of Russia’s seaborne oil exports on a weekly and four-week average basis. The value is calculated by multiplying the average weekly crude price from Argus Media Group by the weekly export flow from each port. For shipments from the Baltic and Arctic ports we use the Urals FOB Primorsk dated, London close, midpoint price. For shipments from the Black Sea we use the Urals Med Aframax FOB Novorossiysk dated, London close, midpoint price. For Pacific shipments we use the ESPO blend FOB Kozmino prompt, Singapore close, midpoint price.

Export duty was abolished at the end of 2023 as part of Russia’s long-running tax reform plans.

Ships Leaving Russian Ports

The following table shows the number of ships leaving each export terminal.

A total of 28 tankers loaded 21.1 million barrels of Russian crude in the week to Jan. 21, vessel-tracking data and port agent reports show. That was down by about 2.4 million barrels from the revised figure for the previous week.

Storms in the eastern Black Sea continue to disrupt shipments from Novorssiysk.

All figures exclude cargoes identified as Kazakhstan’s KEBCO grade. No cargoes of KEBCO were loaded during the week.

Port agent reports seen by Bloomberg suggest that maintenance work will trim exports from the Baltic port of Ust-Luga in the week to Jan. 28, with a four-day gap in scheduled loadings. A drone attack on a neighboring condensate processing plant briefly interrupted loading at Ust-Luga on Sunday, pushing one ship from the week ending Jan. 21 to the following week. As of Tuesday morning, it appears that only one of the two berths at the crude terminal is in operation.

Storm warnings in the Black Sea continue to disrupt shipments from Novorossiysk. With three cargoes of Kazakhstan’s KEBCO grade scheduled to ship from the port in the current week, flows of Russian Urals are likely to be curtailed.

Flows from Kozmino on the Pacific coast may also drop in the coming week. Several tankers anchored near the terminal waiting to load left the area on Sunday for open water.

NOTES

Note: This story forms part of a weekly series tracking shipments of crude from Russian export terminals and the gross value of those flows. Weeks run from Monday to Sunday. The next update will be on Tuesday, Jan. 30.

Note: All figures exclude cargoes owned by Kazakhstan’s KazTransOil JSC, which transit Russia and are shipped from Novorossiysk and Ust-Luga as KEBCO grade crude.

If you are reading this story on the Bloomberg terminal, click here for a link to a PDF file of four-week average flows from Russia to key destinations.

--With assistance from Sherry Su.

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