Russian crude exports slump below 3 million b/d ahead of Moscow's deeper cuts

Russian seaborne crude exports fell for a second consecutive month in July to fall below 3 million b/d for the first time this year while oil product exports held steady as domestic refineries emerged from the maintenance season, tanker tracking data showed.

Russia-origin seaborne crude shipments averaged 2.96 million b/d in July, a 15% fall on the month to the lowest since December and almost 890,000 b/d below the post-war high of 3.85 million b/d seen in May, according to S&P Global Commodities at Sea data. The latest export fall puts July's total slightly below average pre-war levels of 3.1 million b/d.

Almost all the fall in Russian crude exports was seen to China where tanker shipments shrank by more than 400,000 b/d, the data showed. Shipments to India, currently Russia's biggest oil buyer, were little changed at 1.56 million b/d, while ship-to-ship transfers off Greece almost dried up in July.

Overall, Russian crude transferred at sea in July slumped by 6.64 million barrels to 4 million barrels in July, the data showed, the smallest STS volumes since November 2022. The crude export fall follows a surge in May when Indian refiners snapped up record volumes of discounted Russian crude. India refiners -- which buy mostly Urals crude -- saw imports of Russian crude soar to 1.9 million b/d in May.

Shrinking discounts

Urals spot prices have held above the G7's $60/b price cap since July 11 and discounts for Russian crude have continued to shrink over recent months as Russia sources more non-G7 shipping capacity to sidestep G7 price caps on its exports while values for medium, sour crudes continue to strengthen globally.

Urals crude delivered to India's west coast priced against Forward Dated Brent narrowed to a $5.9/b discount on Aug. 1, the tightest spread since Platts, part of S&P Global Commodity Insights, began assessing the differential at $19/b on Jan. 18.

The discount for Urals FOB at the Baltic port of Primorsk to Dated Brent has also more than halved since the start of the year and stood at a post-war low of $15.68/b on Aug. 1, Platts data showed.

The export slump since May also comes as the market looks to gauge Moscow's compliance with its pledge to cut exports by 500,000 b/d in August to help support global oil prices. Moscow had already promised to cut its crude output by 500,000 b/d from March to the end of the year, but most market watchers do not expect Russia to follow through given its surge in export volumes earlier in the year.

"Russia's announcement that it will cut crude oil exports by 500,000 b/d in August could translate into higher domestic crude processing," analysts at S&P Global Commodity Insights said in an Aug. 1 note. "We project Russian refinery runs to increase by about 300,000 b/d in August compared to June. Despite some decline in seaborne exports, we do not expect the planned export cuts to impact output for now."

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Product exports

Russian oil product exports were little changed in July, averaging 2.51 million b/d, the data showed, up from a dip to 2.44 million b/d in May, as Russia's refineries emerged from high levels of seasonal maintenance. Russia's diesel and gasoil exports in July rose by 5% from a month earlier to 929,000 b/d, the data shows, offsetting falls in gasoline, jet and naphtha exports.

Some 950,000 b/d of Russian refining remained offline in the former Soviet Union region as of July 21, according to S&P Global Commodity Insights, and the outages were expected to decline 90,000 b/d during the week to July 28 as more refineries return from scheduled maintenance.

Turkey continued to consolidate its lead as the biggest buyer of Russian fuels in July, with deliveries up by 2,000 b/d to a record high of 540,000 b/d, according to the data.

Russia's fuel oil export to Singapore, where cargoes are typically blended for bunkering, jumped from June to average 87,000 b/d, the highest rate of the year.

Fuel exports to the Middle East fell sharply on the month, however. Russian product exports to Saudi Arabia collapsed by 190,000 b/d to just 28,000 b/d, the data showed, while flows to the UAE fell to 236,000 b/d from 263,000 b/d in June.

Home to Fujairah, the world's third largest bunkering hub, the UAE has been importing large volumes of Russian fuel oil, gasoil, gasoline, naphtha and VGO. Russian fuel shipments to the country surged soon after Moscow's invasion of Ukraine, briefly making it the biggest buyer of Russian fuel as European refiners shunned the country's oil.

Following a record 307,000 b/d of mostly fuel oil loaded for Saudi Arabia in April, the kingdom imported just three cargos of fuel oil, gasoil and VGO last month, the data showed.