According to tanker tracking data analyzed by Bloomberg, Russian exports of maritime crude oil to Asia, and specifically India and China, have declined.
There are tentative indications that Russia’s longstanding practice of diverting crude oil from Europe to Asia is failing. Nearly 30% less were shipped to China and India than at their post-invasion peak.
U.S. self-sanction and pressure on India, China and other importers may not yet have a lasting effect, but there are some early signs that Asian countries may not be able to fully replace European customers from Russia. When moving averages are used to smooth out week-to-week deviations, the trend is clearer.
Before dwindling supplies affect the Kremlin’s war chest enough for President Vladimir Putin to reconsider his invasion of Ukraine, there is still a long way to go. Rising crude prices increase Russia’s export duty revenue and somewhat offset lower crude flows; these revenues are expected to exceed another $160 million each week. Although it is now about 25% higher than it was before the invasion, it is still lower than it was at its peak in April.
While President Joe Biden’s call for more oil from Saudi Arabia and its OPEC partners has been met with a somewhat ambivalent response, a US-led plan to impose a restriction on pricing on Russian oil exports is currently being worked on but faces significant challenges. Any boost will not just come from Saudi Arabia and the United Arab Emirates, but rather from the OPEC+ group of oil producers. Any additional bids are expected to be small given Russia’s dominant position in this group.
The biggest forecasting firms do not see a drop in global demand for oil that would drive prices down, which is the best hope of reducing the Kremlin’s oil revenues.
Due to loading schedules, maintenance, weather conditions, and other factors that may affect flows, assessing exports through vessel movements is extremely noisy. Longer averages may reduce some of the noise, but not all of it.
According to tanker tracking data analyzed by Bloomberg, the four-week moving average of exports shows that Russia’s shipping volumes have been declining since mid-June.
On that basis, throughputs declined in the four weeks to July 15 to 3.24 million barrels per day. Since mid-June, they have fallen by 467,000 barrels per day, or 13%.
More than half of all crude supplied by Russia is consumed by Asian countries, with China and India dominating the region. In the past six weeks, between 55 and 56 percent of Russia’s total maritime exports went to Asia. That number is down from a high of 63% in the four weeks to April 15 and includes tanker volumes traveling from Baltic and Black Sea ports to the Suez Canal.
The average flow of Russian crude to Asia in the four weeks to July 15 was the lowest of the previous fifteen weeks based on current destinations. This remains true if all crude on tankers that have not yet reported whether or not they are heading to the region do so in the coming weeks.
Source: India Information Line