Russia’s four-week average crude exports fell for a third week, dropping to the lowest since December amid a plunge that cut 620,000 barrels a day from the recent peak in April. Flow are set to dip further.

Weekly shipments from the country’s Baltic ports of Primorsk and Ust-Luga have shrunk by 41% in the five weeks since mid-June. The decline likely stems from Russia’s improving compliance with an OPEC+ output target, coupled with a recovery in domestic refining that’s on course to reach a six-month high in July. A Ukrainian drone attack on Rosneft’s Tuapse refinery may undermine some of that progress.

There is no evidence of maintenance work or storms to explain the most recent slump, but a five-day gap in the loading program for Ust-Luga, covering most of this week, suggests that maintenance will cut into flows in the seven days to July 28.

Separately, Ukraine has toughened sanctions on Russia’s Lukoil PJSC, preventing it from supplying piped crude to refineries in Central Europe across Ukrainian territory. Lukoil will divert about 90,000 barrels a day of crude that it is unable to deliver to Hungary and Slovakia to other destinations, which could, in time, raise seaborne exports.

The UK has sanctioned another 11 tankers involved in shipping Russian oil as part of a broader move to tackle the shadow fleet used by Moscow to get its oil to buyers in Asia. With two of those vessels already targeted by the European Union, it brings the total number of ships designated by the West to 62, most of which have remained idle since being cited.

Only three cargoes have been lifted by tankers sanctioned by the US, the UK or the European Union since October for their involvement in the Russian oil trade. The first to load, the SCF Primorye, subsequently transferred its cargo onto the Ocean Hermana in the Riau archipelago in early June. The oil may have been moved onto a third ship, according to TankerTrackers.com Inc., which specializes in detecting secretive cargo movements. The other two, the Bratsk and the Belgorod, disappeared from automated tracking systems for several weeks before reappearing off the coast of Oman, heading back toward the Red Sea. Both vessels appear to have transferred their cargoes onto the VLCC Oxis in the Gulf of Oman and the crude is now heading for the Strait of Malacca.

Crude Shipments

A total of 27 tankers loaded 19.78 million barrels of Russian crude in the week to July 21, vessel-tracking data and port agent reports show. That was down from 20.8 million barrels on 27 ships the previous week. The total includes one of the Arctic Gates shuttle tankers that’s heading directly to China via the Northern Sea Route and another small tanker that loaded the first cargo in at least a year from the small oil field on Kolguyev Island.

It means Russia’s seaborne daily crude flows in the week to July 21 fell by about 150,000 barrels to 2.83 million, giving up about three-quarters of the previous week’s gain. The less volatile four-week average continued to fall, dropping by another 55,000 barrels a day to 3.06 million, its lowest since December.

A small increase in shipments from the Black Sea was more than offset by lower shipments from the Baltic. Flows will almost certainly fall further in the coming week, with no tankers scheduled to berth at Ust-Luga until Friday. Gaps of this duration in loading programs typically indicate maintenance work at the port or on the pipeline supplying it.

The Sakhalin Island terminal of Prigorodnoye saw no shipments for a fourth week.

Two small cargoes have been shipped from Arctic ports. One of the shuttle tankers that normally hauls crude from Gazprom Neft’s Arctic Gates terminal to Murmansk is heading via the Northern Sea Route to China, the first oil tanker to make the trip this year.

Separately, a small cargo of crude has been loaded from Kolguyev Island, about 400 miles east of Murmansk and 46 miles off the coast of the Nenets Autonomous Okrug, whose coastline stretches 1,200 miles along the Baltic Sea. The Minerva Vaso, an 18-year-old, Greek flagged tanker, left the island on Thursday and is now heading for the Mediterranean.

Crude shipments so far this year are about 30,000 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.

Two cargoes of Kazakhstan’s KEBCO were loaded at Novorossiysk during the week.

Flows by Destination

  • Asia

Observed shipments to Russia’s Asian customers, including those showing no final destination, fell to a six-month low of 2.77 million barrels a day in the four weeks to July 21.

About 1.05 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 about 1.55 million barrels a day, down from the revised figure of 1.84 million for the period to July 14.

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 140,000 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.

Most shipments from Russia’s western ports go on to transit the Suez Canal, but some could end up in Turkey. Others may be moved from one vessel to another, with the majority of such transfers now taking place in the Mediterranean, most recently off Morocco, or near Sohar in Oman.

The “Other Unknown” volumes, running at about 30,000 barrels a day in the four weeks to July 21, are those on tankers showing no clear destination. Most originate from Russia’s western ports and go on to transit the Suez Canal, but some could end up in Turkey. Others may be moved from one vessel to another, with the majority of such transfers now taking place in the Mediterranean, most recently off Morocco, or near Sohar in Oman.

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 the nation’s crude. These activities have now been extended to Sep. 15.

  • 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.

Turkey is now the only short-haul market for shipments from Russia’s western ports, with flows in the 28 days to July 21 falling to about 235,000 barrels a day, their lowest since February.

Export Value

The gross value of Russia’s crude exports fell back to $1.48 billion in the seven days to July 21, from $1.58 billion in the period to July 14. The lower flows were exacerbated by a second weekly drop in prices for Russia’s major crude streams to increase the size of the decline in revenues.

Export values at Baltic ports were down week-on-week by about 90 cents a barrel, while shipments from the Black Sea fell by $1.36 a barrel and key Pacific grade ESPO fell by about $1.30 a barrel. Delivered prices in India also dropped, down by about $1.10 a barrel, all according to numbers from Argus Media.

Four-week average income was also down again, falling by about $15 million to $1.62 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.