Russian oil export options are dwindling drastically

Russian oil is piling up on the world’s seas as refiners in India pull back on purchases, leaving Moscow with millions of barrels loaded onto tankers and fewer clear destinations for its crude exports, OilPrice writes.

Russia shipped an average of 3.18 million barrels per day of crude in the four weeks through Jan. 25, according to ship-tracking data compiled by Bloomberg. The volume was almost unchanged from the previous period, but it is about 680,000 bpd below its pre-Christmas peak and the lowest level since August.

The bigger issue is not how much Russia is exporting, but where those barrels are going.

Russian crude shipments to Indian ports fell to about 1.2 million bpd in December, the lowest level in more than three years. Preliminary data for January showed average imports closer to 1.12 million bpd. The withdrawal coincided with the EU’s ban on imports of refined products made from Russian crude, which took effect on January 21, complicating trade flows and refinery economics for Indian buyers, who can no longer sell fuels made from Russian crude to European countries.

As a result, Russian oil is piling up at sea. About 140 million barrels of Russian crude are currently stored on ships, according to Bloomberg estimates, an increase of about 60 million barrels since the end of August.

Some tankers are docked off India’s west coast and near Oman. Others have headed closer to China or been diverted to intermediate destinations such as Port Said or the Suez Canal — many without declaring final discharge points.

Some of the volumes are being offloaded to storage tanks in Indonesia, including at locations in Karimun, Balikpapan and Tanjung Intan, according to tracking data. Even so, only a few shipments have actually been unloaded, underscoring how limited the options have become.

Despite the logistical bottlenecks, Russia’s export revenues have not collapsed. Bloomberg calculations show that the gross value of Moscow’s seaborne crude exports rose slightly to about $920 million per week in the four weeks to Jan. 25, up 2% from the previous period.

Prices for Urals crude from the Baltic rose to an average of $38.44 a barrel, while cargoes from the Black Sea rose $0.70 a barrel to an average of $35.98. Prices delivered to India rose to about $56.27 a barrel, the highest in four weeks.

The risk for Russia is that tighter enforcement of sanctions against the shadow fleet and cautious buyers could turn floating storage from a buffer into a bottleneck.

With India withdrawing and China taking up more selective volumes, Moscow is stockpiling oil for export faster than it can sell it.