Russian seaborne crude exports hit post-war high on Indian buying spree

Russian seaborne crude exports rose to a post-war high in May, according to tanker tracking data, as Moscow continues to find willing buyers for its discounted oil in India, China and Turkey amid an EU import ban and G7 shipping restrictions.

A slowdown in Russian oil product flows exports due to seasonal refinery maintenance, however, saw total Russian oil exports dip for a second consecutive month, according to S&P Global Commodities at Sea data.

Russia-origin seaborne crude exports averaged 3.87 million b/d in May, the highest since Russia invaded Ukraine in February 2022. Russia's seaborne crude loadings have now increased each month since February 2023 and stand 25% above average pre-war levels of 3.1 million b/d, the CAS data shows.

The rise comes despite Russian pledges to extend its 500,000 b/d OPEC+ output cuts to the end of the year from May.

India imported 2 million b/d of Russian crude in the month, the data shows, a 14% jump on April levels and a fresh record high for Russian crude flows into the country. Exports to China to dipped while flows to Turkey recovered sharply to a seven-month high, edging out South Korea as Russia's third-largest crude export destination.

Exports of Russia's main export grade Urals rose to 2.3 million b/d in May, up from 2.2 million b/d in March and April, the data shows, as the medium sour grade remains in strong demand among Asian markets.

With Russia's formerly main crude export markets in Europe shunning its oil, more than 90% of Russia's seaborne crude reports are now headed to Asia, including Turkey, up from pre-war levels of 34%, the data shows.

Incentives to buy cheap Russian crude remain underpinned by deep discounts of Russia's main crude export grade Urals. Urals discount to Dated Brent averaged $26/b in the first three weeks of May, according to S&P Global Commodity Insights data. It stood at $3.70/b in January 2022.

Oil products

With high levels of seasonal refinery maintenance, however, Russian oil product exports fell 13% month on month to 2.27 million b/d, the data shows.

More than 1.6 million b/d of Russian refining capacity remained offline as of May 19, according to S&P Global. Russian crude and condensate production fell 470,000 b/d between February and April, largely due to the heavy refinery maintenance, according to S&P Global analysts.

The biggest change to product exports in the month was a slide in flows to Saudi Arabia, which has been buying cheap Russian diesel and fuel oil in order to boost its own product exports to Europe.

As a result of the slowdown in product exports, total seaborne Russian oil exports slipped to 6.14 million b/d, the data shows, the lowest since February 2023.

STS transfers

The latest shipping data also confirms a slowdown trend in ship-to-ship tanker transfers of Russian crude as ice-class vessels are now able to complete voyages directly to Asia.

As of May 21, CAS identified 10 million barrels of Russian crude that have switched hands at sea, 9.5 million barrels fewer than during March highs.

South Korea remains the primary STS transfer hub for the third consecutive month, the data shows.

Ship-to-ship transfers have also resumed off Kalamata, Greece, following a brief one-month hiatus, the data shows. At last 2 million barrels have been discharged in Greek waters last month. New final destinations for the crude include China and India.

Measured by the final destination of the daughter vessel involved in STS transfers, nearly 3.5 million barrels were diverted to India, outpacing April's figure by 2.76 million barrels, the data shows. Aside from 2.54 million barrels discharged into dark vessels and 366,000 barrels aboard a new vessel awaiting orders, the remaining cargo was headed to China, Malaysia or Singapore as of May 21.

Recent analysis of data from S&P Global Market Intelligence, including Maritime Intelligence Risk Suite and Maritime Portal, has found a 225% increase globally in the shadowy practice of switching off the automatic identification system designed to maintain maritime safety and more recently to help track shipments of oil.

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