Russia's seaborne oil flows continued a steady decline, driven by a hefty loss of barrels from its Sakhalin Island terminal in Asia.

The nation’s four-week average crude exports edged lower in the week to Aug. 18, dropping by 25,000 barrels a day compared with the previous period. Its weekly shipments, which are far more volatile, fell 360,000 barrels a day. Volumes are almost 500,000 barrels a day below an April high.

The decline comes ahead of a plan by several OPEC+ member countries, including Russia, to ease output curbs from October. A decision may come in early September on whether to proceed with or delay those production increases as prices slide amid concerns over global demand.

While shipments of ESPO crude piped to the Pacific terminal at Kozmino are booming, flows from two projects off Russia’s Sakhalin Island have slowed. Eleven Sokol cargoes have been exported since the start of July, compared with 13 in each of the two previous seven-week periods. Just two shipments have been made from the Sakhalin 2 project in the past eight weeks. Until late June, the project was sending that number every three weeks.

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

Russia continues to put some of its sanctioned tankers back to work. The Belgorod and Bratsk, which have already shipped one cargo while under US sanctions, have taken on second loads at Novorossiysk this month. Their earlier cargoes were transferred onto the supertanker Oxis in the Gulf of Oman and are now off the Chinese port of Dalian. The Liberty, formerly NS Laguna, loaded a cargo at Primorsk and the Nevskiy Prospect is scheduled to moor there today.

Crude Shipments

A total of 27 tankers loaded 20.54 million barrels of Russian crude in the week to Aug. 18, vessel-tracking data and port-agent reports show. The volume was down from 23.04 million barrels on 30 ships the previous week.

It means Russia’s seaborne daily crude flows in the week to Aug. 18 fell by about 360,000 barrels to 2.93 million, the second straight weekly decrease. The drop in the weekly flow was the biggest since early July and took shipments to their third-lowest recorded this year.

Despite the sharp drop, the less volatile four-week average edged lower by only 25,000 barrels a day to 3.2 million from a revised 3.22 million the previous week. That measure had gained 80,000 barrels a day in the prior week.

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 should recover in the coming weeks. The project was halted for a month for maintenance work on both oil and liquefied natural gas facilities in early July. Production was restarted in early August, the operator said in a statement. One of the project’s three shuttle tankers is still out of use and a vessel is being transferred from the Sakhalin 1 project, ship-tracking data compiled by Bloomberg show.

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

Flows by Destination

  • Asia

Observed shipments to Russia’s Asian customers, including those showing no final destination, edged lower to 2.94 million barrels a day in the four weeks to Aug. 18. That’s about 9% below the average level seen in April.

About 1.22 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 1.41 million barrels a day, down from a revised 1.53 million for the period to Aug. 11.

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 250,000 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.

The “Other Unknown” volumes, running at about 30,000 barrels a day in the four weeks to Aug. 18, 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 Egypt, 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 Russian crude. These naval drills have now been extended to Sep. 15. As a result, 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.

  • 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 Aug. 18 little changed at about 260,000 barrels a day, the lowest since February.

Shipments to Turkey are down by about 30% from the average level seen between late February and the end of June.

Export Value

The gross value of Russia’s crude exports fell to $1.47 billion in the seven days to Aug. 18, from $1.56 billion in the period to Aug. 11. The lower weekly flows were partly offset by the first weekly increase in prices for Russia’s major crude streams in six weeks.

Export values at Baltic and Black Sea ports were up week-on-week by about $3.50 a barrel, while key Pacific grade ESPO rose by about $4 a barrel. Delivered prices in India were also up, increasing by about $3.50 a barrel, all according to numbers from Argus Media.

Four-week average income was little changed at about $1.58 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.