Page 9 - FSUOGM Week 10 2023

FSUOGM COMMENTARY FSUOGM

become Russia's new biggest fuel buyers, with drop in the month was expected with the imple-
35% of all Russian oil products now headed to mentation of the new European sanctioning, it
those countries. China’s imports of Russian oil has largely resulted in total diesel/gasoil import
continue to rise, but those to India have stag- volumes returning to more normal levels seen
nated for the last few months. before we observed significant inflows over the
past several months aimed [at bolstering] Euro-
Seaborne exports hold up well pean inventories ahead of the anticipated loss of
Despite the slump in Russian oil product exports Russian supply."
in February, the levels seen are largely in line Russian seaborne crude exports remained
with product exports during mid-2022 before resilient in February, dipping back from an eight-
markets began stockpiling discounted Russian month high a month earlier, the data shows, as
fuels ahead of the expected new Western curbs. Moscow redirected record volumes of its crude
The data includes shipments to “unknown” des- to India and a growing grey market in offshore
tinations and ship-to-ship transfers. transfers obscured other buyers.
While Asia played the leading role as a new Russian-origin crude loadings averaged
market for Russian crude exports in 2022, 3.31mn bpd during February, down 300,000
Africa is emerging as a top buyer of oil in 2023. bpd, or 8%, from January levels to hover around
Amongst the biggest buyers of Russian oil so far the highest levels since August 2022 and still
this year were Morocco, Algeria, Nigeria, Sen- above pre-war levels of 3.1mn bpd.
egal, Tunisia, Ghana and Egypt, which have all Despite the G7's $60 per barrel price cap on
doubled their Russian fuel imports to around Russian crude, the value of Russia's key Urals
440,000 bpd, S&P said. Russia's share of Euro- export-grade crude has traded well below $60
pean oil product imports – including STS trans- since December, easing concerns from traders
fer volumes – fell to just 7.5% in February, down and shippers that the shipping controls would
from pre-war levels of 39%, according to the hamper Russian crude flows.
data. “Next month could see Russia's crude exports
“Elsewhere, Turkey, the UAE and China con- slide more sharply, however,” S&P opined. “To
solidated their top-ranking positions as Russia's date, the restrictions had not had a major impact
new biggest fuel buyers, the data shows, with on Russian crude oil production volumes. Rus-
35% of all Russian oil products now headed to sian output fell 10,000 bpd on the month to
those countries,” S&P said. “Despite the slump in 9.85mn bpd in January, according to the lat-
Russian oil product exports in February, the lev- est Platts survey by S&P Global Commodity
els seen are largely in line with product exports Insights. That compares with 10.11mn bpd in
during mid-2022 before markets began stock- February 2022.”
piling discounted Russian fuels ahead of the Analysts at S&P Global expect Russian crude
expected new Western curbs.” and condensate supply will contract by 500,000
"The sharp decline in Russian gasoil headed bpd between December 2022 and March 2023
to Europe has been blunted somewhat by the due to logistical problems and run cuts triggered
continued increase in volumes going to Europe by EU import ban up until February 5. Output
from the Middle East and Asia," S&P Global is then expected to recover by 250,000 bpd by
Commodities Insights analyst Tony Starkey October unless more prohibitive price caps or
said in a February 17 note. "While the Russian new Western sanctions are rolled out. ™

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