Russian oil exports slide to 14-month low as Indian flows slump, products flatline

Russia's seaborne oil exports slid to a 14-month low in November as Moscow's crude flows to India fell sharply while the country's temporary ban on road fuel exports kept oil product flows close to post-Ukraine war lows.

Crude shipments from Russian export terminals averaged 3.1 million b/d in November, a 13% drop on the month to the lowest since August and in line with the average pre-war level of 3.1 million b/d, according to tanker-tracking data from S&P Global Commodities at Sea.

Russia's crude exports had been recovering since August when the government committed to easing export curbs agreed as part of a joint move with OPEC+ kingpin Saudi Arabia to cut 1.3 million b/d of crude supplies to support global oil prices.

But crude flows to India slumped by 670,000 b/d, or 40%, on the month to 1 million b/d following a surge in freight costs and a reported impasse between Delhi and Moscow over Rupee payments for Russia's crude. As a result, China overtook India as Russia's biggest buyer of seaborne crude for the first time since February, the data shows. Russia partly made up for the sharp fall in flows to India with record-high exports to Turkey, it shows.

Poor weather in the Black Sea also hit Russia's loadings of its Urals export crude from Novorosiisk with Urals flows at 320,000 b/d, down from 500,000 b/d in October.

Meanwhile, Russia's oil product exports were little changed on the month averaging 2.15 million b/d, the data showed, as Moscow's fuel shipments remained curtained by a recently-lifted, temporary ban on exports of diesel and gasoline to curb high pump prices.

Combined, total Russian shipped crude and oil product exports averaged 5.25 million b/d, the lowest since September 2022, and 660,000 b/d below pre-war levels of 5.9 million b/d, according to CAS data.

At the latest OPEC+ member meeting, Russia announced it would voluntarily cut an additional 200,000 b/d of supply, bringing its total reduction to 500,000 b/d in the first quarter 2024. The reduction will be from an average level of exports in May and June 2023 and will consist of 300,000 b/d of crude and 200,000 b/d of refined products. According to CAS data -- which excludes Russian pipeline exports mostly via the ESPO line to China -- Russia's average seaborne crude and product exports in May and June stood at 6.1 million b/d.

Crude discounts

The slump in Russian exports also comes amid a rising threat of Western legal action against shippers transporting Moscow's oil above 'price cap' levels of $60/b for its crude or $100/b for products that trade at a premium to crude, such as diesel, and $45/b for products that trade at a discount, such as fuel oil.

Spot prices for Russia's Urals grade have been trading above the G7's $60/b price cap since July 11 but, until recently, Moscow has been successful in redirecting its oil to non-Western customers through a growing shadow tanker fleet. But a spate of recent enforcement action by Western regulators against rogue shippers transporting Russian crude has dented the value of its key export grade. The EU is also seeking to tighten its enforcement of sanctions on Russia under its 12th package of Russia sanctions currently under discussion by member states.

The discount of Urals FOB Primorsk vs Med Dated Brent widened to $15.40/b on Dec 1, according to assessments by Platts, part of S&P Global Commodities Insights, the highest since Aug 2, 2023.

"The US and the EU are attempting to strengthen the Group of Seven (G7) price cap but keep Russian oil flowing to export markets. It is a difficult balancing act. Enhanced enforcement could increase costs for shipping Russian oil for a time, but the Russian oil industry will develop new work-arounds over time," oil analysts at S&P Global said in a recent note.

Meanwhile, rising shipping costs has kept the relative price of Urals delivered to India at recent highs. DAP West Coast India discount to Forward Dated Brent stood at $4.40/b on Dec 1, the tightest margin since Platts began assessing the spread at $19/b in January.