Russia’s Crude Oil Exports Surge to Highest Level in Over a Month
Russia’s crude oil exports surged last week to their highest level in more than a month, just days before the world’s third-largest producer is due to cut its output. According to the International Energy Agency (IEA), Russia’s overall crude and product exports rose to 8.2 million barrels per day (bpd) in January, just ahead of the EU embargo and G7 price cap on refined products, which took effect on February 5.
The commodities analytics firm Kpler found that Russian crude and fuel oil flows to China rose to 1.66 million barrels a day last month, up from 1.2 million December. China and India have been the biggest buyers of Russian crude, which has been discounted in response to Western sanctions. The cap on the price of Russian oil is intended to make it more accessible to poorer countries, without drastically increasing international oil prices, and at the same time, reducing revenue to Russia to reduce the possibility of military action.
Data intelligence firm Kpler reported that flows for last month were the highest since the invasion of Ukraine a year ago and exceeded the previous record set in April 2020. Fuel oil exports reached a record high.
The average of four weeks showed an increase of 129,000 barrels per day in overall seaborne exports, totaling 3.34 million barrels a day. Private refiners likely drove the buying spree, however, state-owned processors have now demonstrated a heightened curiosity in Russian crude after fears of repercussions from America and its allies formerly kept them away.
Windward Ltd., a maritime consultancy, reported an increase in shipping practices utilized to transport Russian crude and oil products that are intended to deceive observers. Russia put together a fleet of tankers to circumvent Western sanctions, but a key bottleneck is emerging. They’re struggling to get the job done, writes Bloomberg oil strategist Julian Lee.
On December 5th, the European Union declared that all EU companies must adhere to a price cap of $60 per barrel when providing shipping and other services for Russian oil cargoes. Russia must rely on European ships, however, they are not allowed to transport Russian oil that costs more than $60. Prior to the implementation of EU sanctions, approximately half of the Russian crude exports arriving from its western ports were transported by vessels from Europe.
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