Russia boosts Pacific oil cargoes as year of war reshapes flows

A year on from Russia’s invasion of Ukraine, Moscow’s seaborne crude exports held close to the highest levels seen since its troops crossed the border, with record volumes leaving its Pacific ports.

The country’s shipments rose marginally to 3.63 million barrels a day from its ports in the seven days through Friday, a level that has been surpassed just four times since the start of 2022. The less-volatile four-week average also gained, before a 500,000-barrel-a-day production cut that's due to come into effect from Wednesday in response to Western embargoes and price caps on Russian oil cargoes, Bloomberg reports.

But the steady flow masks some big swings in regional shipments. Exports from the Black Sea fell sharply, with storms closing the port of Novorossiysk for much of the week. Flows from the Arctic terminal at Murmansk were also down, but the drops were more than offset by what are likely to be record volumes leaving the country’s Pacific terminals.

A record 10 tankers were loaded at the Pacific port of Kozmino last week, with flows there boosted by the use of drag-reducing agents on the ESPO pipeline and the resumption of crude deliveries by rail. Crude shipments from the country's eastern ports are being sold at prices almost 40% higher than cargoes exported through the Baltic, according to a group of researchers.

The volume of crude on vessels heading to China and India — plus smaller flows to Türkiye and the quantities on ships that haven’t yet shown a final destination — rose in the four-week period, to an average of 3.27 million barrels a day, the highest amount observed since Bloomberg began tracking the shipments at the start of 2022.
As the ultimate destinations of cargoes loading in late January become apparent, flows to China have risen to new post-invasion highs. Historical patterns suggest that most of the cargoes currently identified as “Unknown Asia” or “Other Unknown” will end up in India.

Inflows to the Kremlin's war-chest from crude-export duties have plunged since the start of the year. While an easing of crude prices have both played parts in that drop, the biggest effect has come from a change in the formula used to calculate duty rates. A multi-year move by Russia away from taxing oil exports will limit the impact of any tightening of the price cap on exports, such as that called for by former US Treasury Secretary Lawrence Summers.

Ship-to-ship transfers of cargoes in the Mediterranean continue apace. This has been most visible off the Spanish north African city of Ceuta and off the Greek coast near Kalamata. At least 30 cargoes have been transferred between ships in those two locations since the start of the year. Twelve more Aframax tankers that loaded in the Baltic since late January look likely to transfer their loads to other vessels in the Mediterranean, based on their destination signals.