Russia’s big oil exchange is gaining momentum


NEW DELHI: The diversion of Russia’s crude exports to Asia is accelerating, with record volumes heading on tankers to ports in the region. The need for change is becoming more acute as a ban on seaborne imports looms in Europe, which was previously Moscow’s main export market.
Two-thirds of the crude loaded onto tankers at Russian ports is now bound for Asia. That compares to less than two-fifths in the weeks before Vladimir Putin ordered his troops into Ukraine in February. China and India form the backbone of the trade, with smaller volumes going to countries like Sri Lanka and the UAE.
European Union sanctions, which will block nearly all sea deliveries of crude oil from Russia to bloc members, will take effect in just three weeks. The measures will also prevent European tankers from carrying Russian crude and prohibit the provision of insurance, brokerage, finance, ship classification and other services. There will be exemptions for vessels carrying cargo that have been purchased below a price ceiling to be agreed.
The UK has followed the EU’s lead by banning its companies from providing such services to ships. This move, like EU sanctions, will go into effect on December 5.
Total cargoes shipped from Russia fell to a three-week low of 2.9 million bpd in the seven days to Nov. 11, while the less volatile four-week average also fell, though it remained above 3 million. barrels per day for a fifth week. That helped push the Kremlin’s revenue from oil trading to its lowest level since early January.
Crude volume on vessels bound for China, India and Turkey, the three countries that have emerged as the largest buyers of displaced Russian supplies, plus quantities on vessels that have yet to indicate a final destination, rose to a record 2, 39 million barrels a day in the four weeks to November 11th.
Tankers carrying Russian crude are becoming more cautious about their destinations. There has been a big jump in ships pointing to their next destination such as Port Said or the Suez Canal. This has been accompanied by a decline in recent weeks in the volume of tankers indicating they are heading to India. It remains probable, however, that most of these vessels begin reporting Indian ports once they cross the channel.

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Tankers loading now at the Baltic ports of Primorsk or Ust-Luga will not reach unloading terminals in China or India before an EU ban on the provision of insurance and other services takes effect. Any cargo purchased above the yet-to-be-agreed limit will lose coverage on December 5 under current rules. The US and UK have introduced waivers to their rules, exempting cargoes purchased before that date, as long as they are delivered by 19 January. The EU is expected to follow suit.
Shipments from Russian Pacific ports take just a few days to reach Chinese import terminals, and the journey from the Black Sea to Turkey is equally short. Conversely, deliveries to India from all of Russia’s export terminals take several weeks, putting them at a higher risk of incurring fines before they arrive.
A shipment of crude oil from the Arctic port of Murmansk, bound for China via the Northern Sea Route along Russia’s Arctic coast, is now making its way along Russia’s Pacific coast and is expected to arrive at the port of Rizhao on Friday.
Crude flows by destination:
On a four-week average basis, overall maritime exports gave up most of the prior week’s gain at an average of 3.12 million barrels per day. Flows remained above 3 million b/d for the fifth week. Shipments were lower in all regions except Asia.

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All figures exclude cargoes identified as Kazakhstan KEBCO grade. These are shipments made by KazTransoil JSC transiting Russia for export via Ust-Luga and Novorossiysk.
The Kazakh barrels are blended with Russian-sourced crude to create a uniform export grade. Since Russia’s invasion of Ukraine, Kazakhstan has renamed its cargoes to distinguish them from those shipped by Russian companies. Crude oil in transit is specifically exempt from EU sanctions.
Asia
Shipments to Russia’s Asian customers, as well as those on ships with no final destination, which usually end up in India or China, soared in the seven days to Nov. 11. Crude volume bound for Asia reached 2.01 million bpd on a four-week rolling average, with an additional 76,000 bpd on tankers whose offloading point is unclear. The combined figure set a new high for the year so far.

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All tankers carrying crude to unidentified Asian destinations are flagging Port Said or the Suez Canal, with final discharge points unlikely to be apparent until they have crossed the waterway into the Red Sea, at the earliest. Most of these ships end up in India, with some going to China and occasionally to other destinations such as the UAE or Sri Lanka.

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Europe
Russian seaborne crude oil exports to European countries lost the previous week’s gain, falling to a five-week low of 700,000 barrels per day in the 28 days ending Nov. 11. Flows were down 89,000 barrels a day, or 11%, compared to the period ending Nov. 4. These figures do not include shipments to Turkey.

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Volume shipped from Russia to northern European countries dropped in the four weeks to Nov. 11 to a five-week low. All shipments went to storage tanks in Rotterdam for a fifth week.
Exports to Mediterranean countries fell to 693,000 barrels per day on average in the four weeks up to 11 November. earnings of the week. Shipments to Turkey remained above 300,000 bpd for the fifth week. This is more than three times the volume normally seen before Russian troops invaded Ukraine.
Combined flows to Bulgaria and Romania fell to an eight-week low of 146,000 bpd, less than half the peak volume seen in June. Almost all of the volume going to customers in the Black Sea ends up in Bulgaria. The country has obtained a partial exemption from the EU ban on imports of crude oil by sea from Russia.
Flows by export location
Aggregate Russian crude flows fell by 704,000 barrels a day, or 20%, in the seven days to Nov. 11, compared with the previous week. Shipments declined from all regions, with the largest decline in both volume and percentage seen in the Arctic. Figures exclude Ust-Luga and Novorossiysk volumes identified as Kazakhstan KEBCO grade.
Export revenue
Inflows to the Kremlin’s war chest from its crude export tariff fell $31 million to $118 million in the seven days to Nov. 11, with average income also down four weeks, down $ 4 million to $130 million. The weekly measure is the lowest since the first week of the year, with the decline in volumes exacerbated by a lower pre-barrel export duty rate for November shipments.
The November tariff rate is $5.83 a barrel, the lowest level since January 2021, with the Ural Brent discount during the latest calculation period, which runs from September 15 to October 14, at around $25.50 a barrel. The December duty rate will be published in the coming days.

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malek

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