Tracking Russian crude and petroleum products as barrels move through storage centers will be difficult amid tougher sanctions and growing attention to ship-to-ship transfers of Russian-origin liquids, suggest analysts and data.
A ban in the United States and an impending ban in the EU will prohibit the import of products of Russian origin, regardless of how they get there.
“An even greater concern than sea transfers will be tracking Russian origin via tank dumps ashore and re-exports, for example from storage terminals in ARA and the Caribbean,” the industry strategist said. of Clay Rye Energy to S&P Global Commodity Insights.
At the time of re-export, tracking platforms will simply indicate the current origin of these barrels – for example Rotterdam or St. Eustatius – and not Russia, he said.
Another question is what Russian crude and raw materials are used for, said Rebeka Foley, oil analyst at Platts Analytics. “Questions remain about the use of Russian-origin crude to make refined products in certain markets that could then be exported to Europe, despite boycotts and sanctions against imports of Russian-origin products by governments and European traders,” she said.
In the case of crude, Russian Urals is trading at a significant discount to the international benchmark Dated Brent, which adds to the appeal of Russian material. Platts priced Urals cargoes delivered to Rotterdam at a $35.20/bbl discount to Brent dated July 13, according to S&P global data.
Re-exports from Fujairah
The Middle Eastern oil hub of Fujairah has become a key importer of Russian fuel oil in recent months, with changing trade flows coinciding with an increase in fuel oil exports from Fujairah to the United States as US refineries seek to replace Russian raw materials. , depending on trade sources and shipping data.
Fuel loadings from Russia to Fujairah hit a record high of 527,000 tonnes (116.00 bpd) in June, according to preliminary estimates from data intelligence firm Kpler. This compares to 403.00 t and 482,000 t in May and April, respectively. In February, only 86,000 tonnes of Russian fuel oil were delivered to the Fujairah hub, according to Kpler data.
The two largest exporters to Fujairah are Iran and Russia, which account for more than 90% of monthly imports of 3.5% sulfur fuel oil, according to Kpler.
Fuel oil exports from Fujairah to the United States have averaged between 255,000 and 400,000 tonnes since late February, according to Kpler and US Customs data.
Fujairah has never been a major exporter to the United States, according to data from Kpler and US Customs. However, since Russia’s invasion of Ukraine, the United States has increased its purchases of fuel oil from Fujairah.
STS activity in different regions
In the weeks following the invasion, there was a noticeable increase in Russian oil deliveries to the Greek port of Kalamata, a key blending center in the Mediterranean region, according to Kpler.
The three-month average of fuel oil imports in Kalamata rose from 218,000 tonnes in February to a record high of 481,000 tonnes at the end of May, according to Kpler.
Compared to the same period of 2021, fuel oil shipments to Kalamata have soared more than 500%, according to Kpler data.
However, market participants have also pointed to a potential slowdown in blending activities in Kalamata more recently, with fuel oil deliveries to the port expected to total 179,000 tonnes in June, according to Kpler data.
STS activity also takes place elsewhere. There were three “dark” STS cases in June, with ships loading in the Russian Baltic and then performing STS transfers, while their transponders were turned off, outside the Azores, according to Vortexa data. According to Windward, 42% of sanctioned Russian oil is routed to China, the majority via STS hubs in Denmark and South Korea.
“These findings highlight the challenge posed by STS freight transfers to the enforcement of restrictions imposed by the international coalition opposed to Russia’s invasion of Ukraine,” Seigle said.
An important task
Once the sanctions officially take effect, it may be more difficult to send Russian oil to certain destinations, even with the help of STS activity or re-exports from blending hubs.
Platts Analytics expects Russian oil exports to decline overall and shift to Asia in the case of crude and to Africa and other destinations in the case of commodities.
According to this forecast, Europe would see about 1.700 million b/d less product while Asia and Africa would see 700,000 b/d more.
This has yet to materialize to a large extent. Data from S&P Global showed Russian exports of crude and products by waterway stood at 6 million bpd in January and barely below those in June.