Russia’s Oil Cargoes Surge With Pipe Down and Fuel Ban at Hand
Four-week average flows of Russian crude highest since June with new EU curbs looming
Russia’s crude tankers are busy.
Russia’s seaborne oil flows look as if they are moving higher. Two possible explanations: the nation is pushing more cargoes onto the water after Germany and Poland all but halted piped imports, and Moscow has one eye on an impending ban on fuel purchases by the European Union.
Russia's crude exports rebounded in the seven days to Jan. 27, recovering most of the previous week’s loss. Aggregate volumes rose by 480,000 barrels a day, or 16%, to 3.6 million in the week. Shipments from Baltic and Pacific ports were both up by 310,000 barrels a day from the previous week, with the increase partly offset by a decline in volumes from the Arctic.
Russia has already lost its key European market for crude and is about to do the same for refined products — an EU import ban is due to come into force on Feb. 5. Like the earlier embargo on crude, it will be accompanied by a price cap mechanism, intended to allow flows to continue to non-European buyers as long as cargoes are purchased below yet-to-be agreed prices. Some analysts question whether Russia will be able to find buyers for the fuel cargoes Europe doesn’t take, creating questions about where that would leave the nation’s refining industry.
The week-on-week increase in crude flows drove up the country's four-week average, which smooths out peaks and troughs in what are noisy weekly data, affected by the timings of when individual shipments depart and things like weather conditions and work at ports. By that measure, seaborne flows from Russia, at 3.34 million barrels a day, were the highest since June.
Inflows to the Kremlin's war-chest from crude export duties rose in line with flows, but the 16% increase in revenues was worth just $8 million, with the burden of taxes on Russian oil shifting from exports to production.