Russia's Oil Flows by Sea Surge But Cargoes Sit Undelivered

Yahoo

04-03-2025

(Bloomberg) -- The amount of Russian crude oil that's stuck at sea is rising as Joe Biden's farewell sanctions on Moscow continue to snarl the nation's petroleum trade.
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While exports from the country's ports jumped to a three-month high, India's refiners are so far refusing to accept cargoes that have been moved on sanctioned tankers, even if only for part of their voyage. Some Chinese ports appear to be taking the same approach.
The Indian decision has effectively closed off the south Asian nation as a destination for crude from the Arctic and from projects off Sakhalin Island in Russia's Far East, which all rely on specialized shuttle tankers blacklisted by President Biden on Jan. 10. The reluctance of some Chinese ports has left tankers idling for weeks, unable to offload their cargoes.
That could all change if President Donald Trump reverses the Biden measures.
In January, the outgoing Biden administration announced wide-ranging restrictions against Russia, including designating 161 tankers tied to the country's oil trade, including all the shuttle tankers used in the Arctic and by the Sakhalin 1 and 2 projects off Russia's east coast.
About 7.7 million barrels of crude from the two Sakhalin projects have been held on tankers for more than two weeks. Prior to the latest sanctions they would typically be delivered to refiners in about a week. A further 12 million barrels from the Arctic have gone on far longer voyages than originally planned, leaving the oil at sea for months.
The move has also seen the premium shipowners are charging to haul Russia's flagship oil soar. The cost of transporting 1 million barrels of Urals crude from Russia's Black Sea port to the west coast of India has increased to $7.9 million, up from $5.6 million at the end of last year.
Despite the difficulties in delivering cargoes, a surge in shipments from the Black Sea last week saw four-week average crude flows from Russian ports in the period to March 2 rise to 3.09 million barrels a day, the highest since the period ending Dec. 1.
Delivery Difficulties and Covert Transfers
Before Biden's Jan. 10 sanctions package, India was the destination for about 60% of Russia's Arctic crude exports, taking about 64 million barrels last year. It was also the landing place for about 14 million barrels of Sokol crude from the Sakhalin 1 project in the first nine months of 2024, equivalent to almost 30% of total shipments in that period, though that trade dried up in the final quarter of last year.
Arctic crude loaded after Jan. 10 has started to arrive in the Arabian Sea, close to the ports on India's west coast that were initially identified as their destinations in shipping data seen by Bloomberg.
But instead of being delivered, it has been transferred covertly onto other ships off the coast of Oman. Those ships, where it's been possible to identify them, appear to be heading for China. That's stretching the supply chain for Moscow's Arctic grades even further, boosting the amount of Russian crude on the water and forcing India's refiners to seek alternatives.
No cargoes of Russia's Arctic crude loaded after Jan. 10 have been delivered to India, vessel-tracking data compiled by Bloomberg show.
In the Pacific, only five of 19 cargoes of Sakhalin crude loaded since the latest ban have been delivered. Three of those were discharged into storage tanks at Yangshan port near Shanghai, tracking data show. The facility isn't connected to any of China's refineries, and the move could simply be designed to hide the true origin of the barrels.
Shuttle tankers are continuing to transfer Sokol cargoes onto other vessels in Nakhodka Bay, with satellite imagery revealing another switch taking place today. But even after they have been transferred, Pacific cargoes are not proving easy to discharge.
A supertanker that took about 2 million barrels of Sokol crude through similar transfers in the first 10 days of February is still holding its cargo after failing to discharge it at Yantai in China.
Crude Shipments
A total of 32 tankers loaded 24.71 million barrels of Russian crude in the week to March 2, vessel-tracking data and port-agent reports show. The volume was up from a revised 20.62 million barrels on 28 ships the previous week.
Daily crude flows in the seven days to March 2 jumped by about 580,000 barrels, or 20%, from the previous week to 3.53 million. The increase reversed almost all of an 18% drop seen the previous week.
Shipments of Russian crude from Novorossiysk surged to six cargoes, while flows from the Baltic slipped. Exports from the Pacific were unchanged from the previous week, while Arctic shipments rose.
Less volatile four-week average flows were up by about 120,000 barrels a day from the previous week, to 3.09 million barrels a day, the highest level in three months.
One cargo of Kazakhstan's KEBCO crude was loaded during the week from Novorossiysk.
Export Value
The gross value of Moscow's exports jumped by about $210 million, or 16%, to $1.52 billion in the week to March 2.
Export values of Russian Urals crude fell by about $2.10-$2.50 a barrel, while the price of key Pacific grade ESPO dropped by about $2.10/bbl. Delivered prices in India were down by about $1.40, all according to numbers from Argus Media.
On a four-week average basis, income rose in the period to March 2 to about $1.35 billion a week, up from a revised $1.31 billion in the period to Feb. 23.
Flows by Destination
Observed shipments to Russia's Asian customers, including those showing no final destination, rose to 2.91 million barrels a day in the four weeks to March 2, bringing them 8% below the average level seen during the most recent peak in October.
Turkey is now the only short-haul market for shipments from Russia's western ports, with flows in the 28 days to March 2 recovering the previous week's drop to average about 180,000 barrels a day. Turkey's biggest refiner confirmed it has halted purchases of Russian oil after earlier signaling that it would restrict them to avoid falling foul of US sanctions.
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, March 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.
Bloomberg classifies ship-to-ship transfers as clandestine if automated position signals appear to be switched off or falsified — a tactic known as spoofing — to hide the two vessels involved coming together to make the cargo switch.
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 for a link to a PDF file of four-week average flows from Russia to key destinations.
--With assistance from Sherry Su and Rakesh Sharma.
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