Russia's seaborne oil flows rebounded to the highest in almost two months, boosted by a recovery in shipments from its Sakhalin Island projects in Asia.

The nation’s four-week average crude exports increased to 3.26 million barrels a day in the week to Aug. 25, rising by 60,000 barrels a day compared with the previous period. Its weekly shipments, which are far more volatile, jumped 390,000 barrels a day.

The boost was largely driven by a recovery in flows from projects off Russia’s Far East coast. Sakhalin 2 has now returned from a month-long maintenance shutdown, shipping only its third cargo in nine weeks. Two cargoes of Sokol crude were also loaded from the Sakhalin 1 export terminal at De Kastri, up from one the previous week. And flows of ESPO crude from Kozmino, delivered by pipeline and rail from Siberia, have been running at nine cargoes a week for the past three weeks.

The increase comes ahead of a plan by several OPEC+ member countries, including Russia, to ease output curbs from October. Even if the group does lift production, which remans uncertain amid a weakening outlook for oil, the country’s share of any additions will be tempered by Moscow’s pledge to make deeper cuts to compensate for pumping above its OPEC+ target earlier this year.

After the first cargoes carried on tankers sanctioned by the US were successfully delivered to China, Russia has become much more active in putting those ships back to work. At least 10 shipments of crude and refined products have now been made on vessels blacklisted by the US, UK or the European Union, with seven of them loaded in the past five weeks.

Russia’s oil refineries boosted runs in the first three weeks of August. If the processing rate is sustained throughout the month, it will be the highest average monthly level since July 2023.

Crude Shipments

A total of 30 tankers loaded 23.44 million barrels of Russian crude in the week to Aug. 25, vessel-tracking data and port-agent reports show. The volume was up from a revised 20.73 million barrels on 27 ships the previous week.

It means Russia’s seaborne daily crude flows in the week to Aug. 25 rose by about 390,000 barrels to 3.35 million, the highest in three weeks. Though still relatively small, the increase in the weekly flow was the biggest since June.

The less volatile four-week average was also up, rising by 60,000 barrels a day to 3.26 million from 3.2 million the previous week. That measure has increased in three of the past four weeks to stand at its highest since the first week of July.

Crude shipments so far this year are about 40,000 barrels a day below the average for the whole of 2023.

Russia terminated its export targets at the end of May, opting instead to restrict production, in line with its partners in the OPEC+ oil producers’ group. The country’s output target is set at 8.978 million barrels a day until the end of September, after which it is scheduled to rise at a rate of 39,000 barrels a day each month until September 2025, as long as market conditions allow. A decision on whether to proceed with the easing of cuts is expected early next month.

Moscow has also pledged to make deeper output cuts in October and November this year, then between March and September of 2025, to compensate for pumping above its OPEC+ quota earlier this year.

Shipments from the Sakhalin 2 project are recovering after the project was halted for a month for maintenance on both oil and liquefied natural gas facilities in early July. One cargo was loaded during the week to Aug. 25.

Two cargoes of Kazakhstan’s KEBCO crude were loaded during the week, one each at Novorossiysk and Ust-Luga.

Flows by Destination

  • Asia

Observed shipments to Russia’s Asian customers, including those showing no final destination, rose to 3.08 million barrels a day in the four weeks to Aug. 25. That’s the most since May, but still about 9% below the average level seen in April.

About 1.2 million barrels a day of crude was loaded onto tankers heading to China. The Asian nation’s seaborne imports are boosted by about 800,000 barrels a day of crude delivered from Russia by pipeline, either directly, or via Kazakhstan. 

Flows on ships signaling destinations in India averaged 1.62 million barrels a day, up from a revised 1.5 million for the period to Aug. 18.

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

The equivalent of about 240,000 barrels a day was on vessels signaling Port Said or Suez in Egypt. Those voyages typically end at ports in India or China and show up as “Unknown Asia” until a final destination becomes apparent.

Russia’s oil flows continue to be complicated by the Greek navy carrying out exercises in an area that’s become associated with the transfer of Russian crude. These naval drills have now been extended to Sep. 15. As a result, recent cargo switches have moved to the waters off Egypt’s Port Said, where two Suezmax cargoes were transferred to a larger vessel for shipment to Asia via the Cape of Good Hope.

The waters off Port Said are also being used to switch the first LNG shipment from Russia’s Arctic LNG 2 project, which was sanctioned by the US last year, from one vessel to another after the tanker that carried the cargo from the Ob estuary was also sanctioned by the US. In response to the US actions, Moscow is developing a shadow fleet of LNG tankers in a similar way it did for transporting crude oil and products.

  • Europe and Turkey

Russia’s seaborne crude exports to European countries have ceased, with flows to Bulgaria halted at the end of last year. Moscow also lost about 500,000 barrels a day of pipeline exports to Poland and Germany at the start of 2023, when those countries stopped purchases.

Pipeline deliveries to Hungary and Slovakia, which cross Ukraine through the southern leg of the Druzhba pipeline system, have also been disrupted in recent weeks by Kyiv’s ban on crude belonging to Lukoil PJSC crossing its territory. Hungary said refiner Mol Nyrt is discussing a workaround, and the company’s CEO said the country won’t suffer any oil shortages.

Turkey is now the only short-haul market for shipments from Russia’s western ports, with flows in the 28 days to Aug. 25 falling to about 180,000 barrels a day, the lowest since April 2023.

Export Value

The gross value of Russia’s crude exports rose to $1.62 billion in the seven days to Aug. 25, from $1.48 billion in the period to Aug. 18. The higher weekly flows were partly offset by another decline in prices for Russia’s major crude streams, the sixth in seven weeks.

Export values at Baltic and Black Sea ports were down week-on-week by about $2.20 a barrel, while key Pacific grade ESPO fell by about $3.20 a barrel. Delivered prices in India were also down, falling by about $2.20 a barrel, all according to numbers from Argus Media. 

Four-week average income was little changed at about $1.59 billion a week. The four-week average peak of $2.17 billion a week was reached in the period to June 19, 2022.

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.