In recent weeks, Russia’s seaborne crude oil exports have experienced a significant downturn, evidenced by a striking decline of approximately 530,000 barrels per day during the week ending November 3. This marked the largest weekly drop since early July, subsequently reducing the four-week average export rate. Notably, there were no shipments from the Arctic port of Murmansk, and only one shipment from Novorossiysk on the Black Sea during this period. Additionally, Russian export volumes have seen a consistent decline for the second consecutive week, with four-week averages reducing by 90,000 barrels a day, even as major ports on both the Baltic and Pacific coasts operated at near-capacity levels. This sharp decrease in exports may be attributed in part to a pause in the loading schedule from Novorossiysk, signaling potential maintenance in the port or its related pipeline systems.
Alongside these export fluctuations, it was observed that Russia’s primary refining rate surged sharply in late October, coinciding with the waning of seasonal maintenance activities, likely resulting in less crude oil being available for export. India’s Petroleum Minister Hardeep Puri indicated that despite a slight dip in Russian crude imports, India remains the largest market for Moscow’s seaborne crude, supplying 38% of its overall crude needs. He expressed a willingness to increase imports if the pricing aligns favorably. The timing of this export slump aligns with OPEC+’s prolonged decision to delay the gradual resumption of supply curtailments, keeping Russia’s production targets on hold until at least the beginning of next year.
Moreover, data from the week to November 3 revealed that Russian oil transport reduced to a total of 21.11 million barrels loaded onto 29 tankers, compared to 24.97 million barrels on 32 vessels in the preceding week, indicating a broader downward trend in crude shipments. Overall daily crude flows have diminished to 3.02 million barrels, positioning this week as a six-week low. The reduction in flows primarily stemmed from the decline in shipments from Russian Black Sea and Arctic ports which outweighed any increment in Pacific exports. Consequentially, the four-week average of crude exports also fell for the second week, now averaging 3.32 million barrels per day.
In terms of financial implications, the Kremlin has seen a marked decrease in oil revenue tied to the declining volumes of exports and falling prices. The gross revenue from oil exports dipped by about $250 million down to approximately $1.35 billion during the week ending November 3. The downturn in revenue was compounded by a drop in weekly average prices for Russia’s crude oil benchmark grades, reflecting a broader trend influenced by geopolitical factors and the global oil market’s response to Iranian geopolitical tensions.
Examining the destinations for Russian crude, overall shipments to Asian buyers experienced a downtrend, falling to an average of 3.03 million barrels daily, marking a 6% decrease from the peaks observed in April. Notably, around 1.3 million barrels daily were shipped to China, supplemented by approximately 800,000 barrels per day pipelined from Russia. In contrast, shipments to India dropped to an average of 1.27 million barrels per day, showing signs of potential growth as discharge ports clear for vessels currently en route. The complexities of destination tracking also highlighted fluctuations, with vessels signaling “unknown” destinations accounting for considerable volumes, particularly en route to Egypt via the Suez Canal.
On the European front, Russian crude shipments to various European nations have essentially come to a halt since the end of last year, with significant losses in pipeline exports to Poland and Germany earlier in 2023. Currently, Turkey stands as the only viable short-haul market for Russian crude from its western ports, maintaining a steady flow of about 290,000 barrels daily. This export series forms an ongoing analysis of Russian crude oil trade dynamics, focusing on the impacts of geopolitical actions, market fluctuations, and shifts in foreign demand, with future updates on this trend to follow.