Russia Cuts Oil Exports After Pledging Redress for Excess Output

Julian Lee
·7-min read

(Bloomberg) -- Russia’s four-week average crude exports fell for a fourth week, with shipments hitting the lowest level since mid-February before a meeting of the OPEC+ producer group that was held on Sunday.

Most Read from Bloomberg

Russia had pledged to compensate for overproduction against its April output target, which it blamed on the “technicalities’’ of making significant output cuts. Falling crude exports may indicate that Moscow is following through on its promise, though production and exports are not perfectly correlated.

Exports in April were about 120,000 barrels a day above a target set for that month, but flows in May fell about 170,000 below a separate, less restrictive, goal. From this month, Russia no longer has an export target after it came into line with its OPEC+ colleagues and replaced a complicated combination of production and exports ceilings with simplified output-only limits that are preferred by the group.

Though weekly export volumes were stable, a small gain in prices saw the gross value of Russia’s shipments edge higher in the seven days to June 2.

The Kremlin continues to test US-led restrictions on its oil shipments.

Russia is developing closer relationships in the Middle East, most recently adding Oman to its growing list of partners in the region. Moscow already co-chairs a key committee of the OPEC+ group of oil producers with Saudi Arabia, while much of the trading of Russian oil moved to the United Arab Emirates after being shut out of Europe following Moscow’s 2022 invasion of Ukraine.

With ship-to-ship transfers off Greece hampered by naval exercises in the bay favored for such activities, switches are taking place elsewhere, with several cargoes moved from one vessel to another off the coast of Oman and, more recently, near Morocco.

Separately, two sanctioned Russian tankers have loaded cargoes of crude at Novorossiysk in recent weeks. The Bratsk, until recently named the NS Burgas, took on about 1 million barrels of Urals crude on May 23 and is now headed through the Red Sea, bound for Singapore. The first sanctioned vessel to load, the SCF Primorye, disappeared for about two weeks from AIS tracking east of Singapore, a popular location for hidden ship-to-ship oil transfers.

If the cargoes ultimately end up being delivered to oil refineries, it could pave the way for other sanctioned tankers owned by state-controlled Sovcomflot PJSC to return to work. The company has renamed and reflagged at least 10 of its 21 ships that were listed by the US Treasury Department for breaching a G7-led price cap on Russian oil.

Crude Shipments

A total of 29 tankers loaded 22.53 million barrels of Russian crude in the week to June 2, vessel-tracking data and port agent reports show. That was virtually unchanged from 22.54 million barrels the previous week.

Russia’s seaborne crude flows in the week to June 2 were steady at 3.22 million barrels a day. The less volatile four-week average fell, down by about 115,000 barrels a day to 3.27 million, for the fourth straight decline.

Fewer shipments from the Black Sea port of Novorossiysk and the Pacific ports of Kozmino and De Kastri were partly offset by two more departures from the Arctic terminals at Murmansk.

Crude shipments so far this year are running about 5,000 barrels a day above the average for 2023.

Russia told OPEC+ that it would cut crude exports during May by 71,000 barrels a day from their average May-June level. Weekly shipments were about 290,000 barrels a day below the target, while the four-week average was about 245,000 barrels a day below. Seaborne shipments in the first three months of the year exceeded Russia’s target level for that period by just 16,000 barrels a day, while April flows were about 120,000 barrels a day above that month’s target. Russia has no oil export targets beyond the end of May.

OPEC+ oil ministers met on June 2 and agreed to stretch most output targets to the end of 2025. The group decided to extend the second round of voluntary reductions, to which Russia eventually contributed 471,000 barrels a day, only until the end of September. After that, they will be relaxed over the following 12 months, as long as market conditions allow.

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

Flows by Destination

Observed shipments to Russia’s Asian customers, including those showing no final destination, fell to an eleven-week low of 2.93 million barrels a day in the four weeks to June 2, from 2.99 million in the four-week period to May 26.

About 1.09 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 1.53 million barrels a day.

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 180,000 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 130,000 barrels a day in the four weeks to June 2, 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 most such transfers now taking place in the Mediterranean, or more recently off Morocco.

Russia’s oil flows continue to be complicated by the Greek navy carrying out exercises in an area that’s become synonymous with the transfer of the nation’s crude. The activities, which briefly halted on May 19, resumed and ran until June 3.

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 June 2 slipping to about 340,000 barrels a day.

Export Value

The gross value of Russia’s crude exports edged higher to $1.57 billion in the seven days to June 2 from about $1.56 billion in the period to May 26, aided by a small increase in prices. In contrast, four-week average income was down, dropping by about $72 million to $1.59 billion a week, the lowest it’s been since February. 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.

NOTES

This story forms part of a weekly series tracking shipments of crude from Russian export terminals and the gross value of those flows. The next update will be on Tuesday, June 11.

All figures exclude cargoes identified as Kazakhstan’s KEBCO grade. Those are shipments made by KazTransoil JSC that transit Russia for export through Novorossiysk and Ust-Luga and are not subject to European Union sanctions or a price cap. The Kazakh barrels are blended with crude of Russian origin to create a uniform export stream. Since Russia’s invasion of Ukraine, Kazakhstan has rebranded its cargoes to distinguish them from those shipped by Russian companies.

Vessel-tracking data are cross-checked against port agent reports as well as flows and ship movements reported by other information providers including Kpler and Vortexa Ltd.

If you are reading this story on the Bloomberg terminal, click here for a link to a PDF file of four-week average flows from Russia to key destinations.

--With assistance from Sherry Su.

Most Read from Bloomberg Businessweek

©2024 Bloomberg L.P.

  • Up next
  • Up next
  • Up next
  • Up next

Latest stories

  • 26 Extremelyyyyyy Useful Industry Hacks That Companies Don't Want Customers To Know

    "I've flown round trip to Chicago for $30, Houston for $45, Miami for $50, etc."

  • Chinese firms eye Morocco as way to cash in on US electric vehicle subsidies

    After the United States passed new subsidies designed to boost domestic electric vehicle production and cut into Beijing’s supply chain dominance, Chinese manufacturers began investing in an unlikely place: Morocco. In the rolling hills near Tangiers and in industrial parks near the Atlantic Ocean, they have announced plans for new factories to make parts for EVs that may qualify for $7,500 credits to car buyers in the United States. Similar investments have been announced in other countries that share free trade agreements with the United States, including South Korea and Mexico.

  • BMW attacks EU tariffs on Chinese electric car imports

    BMW has accused the European Union of protectionism as Brussels prepares to hit imported Chinese electric cars with a wave of tariffs.

  • 3 penny stocks I’d buy to target a £1,280 passive income

    These high-dividend penny shares could be great passive income buys for years to come. Here Royston Wild gives the lowdown on their prospects. The post 3 penny stocks I’d buy to target a £1,280 passive income appeared first on The Motley Fool UK.

  • Oil Gains on Reports of Substantial Fall in U.S. Inventory

    Oil prices were edging higher as reports of a larger-than-expected draw in U.S. crude stockpiles signals solid demand during the summer driving season in the world's top consumer. Brent crude and WTI were both up 0.3% to $86.55 and $83.11 a barrel, respectively, after reaching their highest level in more than two months in the previous trading session. Crude inventories fell by 9.16 million barrels last week, according to reports citing figures from the American Petroleum Institute ahead of official data later on Wednesday.

  • The BT share price rose 37% this quarter! What’s driving the growth?

    The BT share price is on the up. Mark Hartley is considering whether the growth spurt is a one-off occurrence, or is able to continue. The post The BT share price rose 37% this quarter! What’s driving the growth? appeared first on The Motley Fool UK.

  • Drivers told 'fill up sooner rather than later' amid petrol and diesel warning

    The average price of a litre of petrol at UK forecourts fell from 150.1p on April 24 to 144.5p at the end of last week, but has stabilised since then

  • Laid Off Tech Worker Suggests That Unemployed People Should Sell Their Blood to Survive

    As the San Francisco Bay Area reels from round after round of tech industry layoffs, one underemployed industry veteran is urging others in her position to do anything — including sell their blood — to make ends meet. In an interview with SF Gate,

  • NEETS are not working by choice—but a ‘perfect storm’ is creating a pool of highly trained and willing workers who are the ‘new unemployables’

    A significant chunk of young NEETS are well-qualified and want to work, but just can’t land a job—and may never, new Korn Ferry report warns.

  • How U.S.-China competition is benefiting the world—and reshaping the global economy

    The migration of supply chain to third countries by Chinese, U.S., and European multinationals is an overlooked dimension of the emerging world order.

  • Residents may be affected as months of work on gas network set to begin

    Works to upgrade the gas network in one part of Abergavenny in Monmouthshire are set to begin, find out whether you will be affected.

  • Microsoft will pay $14M to settle allegations it discriminated against employees who took leave

    Microsoft Corp. has agreed to pay $14.4 million to settle allegations that the global software giant retaliated and discriminated against employees who took protected leave, including parental and disability, the California Civil Rights Department announced Wednesday. The proposed settlement stems from a multi-year investigation by the California agency and the consent decree is subject to approval in state court in Santa Clara County, where the Redmond, Washington-based company has an office. The state agency, which launched its investigation in 2020, alleged that employees who took leave from work due to pregnancy or disability, or to bond with a new baby or care for a sick family member, received lower bonuses and unfavorable performance reviews.

  • Appeals court rejects Broadway producer's antitrust claim against actors' and stage managers' union

    An appeals court on Tuesday rejected an appeal by a Tony Award-winning producer who claims that a union for actors and stage managers organized an illegal boycott that prevented him from producing live Broadway shows. The 2nd U.S. Circuit Court of Appeals in Manhattan ruled that the producer, Garth Drabinsky, could not continue with his $50 million lawsuit alleging that the Actors’ Equity Association violated antitrust and various state laws, including defamation. The union represents over 50,000 theater actors and stage managers.

  • Exxon-Hess arbitration panel nears formation, sources say

    The final member has been chosen for a three-person arbitration panel meant to settle Exxon Mobil's claim against Chevron's $53 billion purchase of Hess Corp, two people familiar with the matter told Reuters. The panel's formation would be a milestone in a long-delayed process that has cast uncertainty over the mega-merger, which both Chevron and Hess had hoped would close in the first half of 2024. Exxon filed the arbitration claim with the International Chamber of Commerce (ICC) in March, arguing that it has a right of first refusal over Hess's assets in Guyana.

  • Ruling paves way for businesses and public to sue water firms over sewage

    Decision by supreme court means water companies could be sued for damage caused by dumping of human waste

  • ‘We’re in limbo’: Boeing takeover leaves longtime Belfast factory under threat

    Workers and politicians fear steep job cuts at Northern Ireland’s Spirit AeroSystems, which has about 3,500 workers

  • Germany stops planned sale of VW's gas turbine business to China

    Germany's cabinet blocked the planned sale of the gas turbine business of Volkswagen unit MAN Energy Solutions to a Chinese company on Wednesday, with ministers citing security reasons. The decision comes amid rising trade tensions between the EU and China. Germany's economy ministry can review and stop transactions deemed to have national security implications, and Berlin and the EU are trying to reduce risks from economic ties with Beijing.

  • Revolut reports record profits as it hints at plans for IPO

    London-based fintech company has been waiting more than three years for its UK licence to be approved

  • German industry turns to solar in race to cut energy costs

    For months, Philip Matthias tried to convince his father to install solar panels on their company's roof in the eastern German state of Thuringia, aiming to cut electricity costs and carbon emissions at the metal products factory. Since the war in Ukraine and the sudden drop in Russia fossil fuel exports to Germany, Berlin has introduced laws to accelerate solar power expansion, part of its plan to cover 80% of the country's energy from renewables by 2030. Encouraged by a feed-in tariff providing a guaranteed price to renewable energy producers selling their power, as well as reduced solar panel costs, German companies are increasingly turning to solar to get around high energy costs.

  • Persimmon Homes manager earns top industry award two years in a row

    A site manager has been honoured with a significant national industry award.