“Eastern Express” of Russian oil companies exporting millions of barrels to India and China has unexpectedly failed.
Oil shipments to key buyers in the Asian market fell sharply in July, and as a result, total oil exports from Russia collapsed to a six-month low. In the week ending July 9, tankers exported 2.86 million barrels a day from Russian seaports, Bloomberg calculated based on ship movement data.
Compared with the previous week, exports fell 27%, or 1 million barrels per day, and were the lowest this year, if not including a temporary dip in late June, when the port of Primorsk on the Baltic Sea was shut down due to maintenance work. The 4-week average export volumes fell to 3.21 mln bpd, the lowest since late January.
The export failure primarily affected buyers in the Asian market – the volume of shipments there fell to 2.93 million barrels per day, although in May it exceeded 3.5 million barrels per day (4-week average). Shipments to China fell to 1.08 million barrels per day, the lowest since December last year, and to India – to 1.22 million barrels, which also became the minimum value this year.
Exports to Turkey and Bulgaria, meanwhile, remained stable at 177 and 104 thousand barrels per day, respectively. Another 630 thousand barrels per day were exported by tankers hiding the destination.
Back in February, the Russian authorities announced a production cut of 500 thousand barrels daily in order to raise prices for Urals, which was trading at discounts of up to $30 per barrel relative to Brent. But export volumes were not affected in any way – on the contrary, they even increased and at the end of April reached a record 4.2 million barrels per day since the beginning of the war.
Now exports have failed. Chinese refineries started refusing oil from Russia back in June, preferring barrels from Iran, which were cheaper, an oil trader working in the region told Reuters.
For India, throwaway prices for Urals are also a thing of the past: the Russian grade is sold in the country’s ports at a discount of only $4, The Times of India writes, citing sources familiar with the situation.
Although the government’s goal has been achieved – oil from Russia has gone up in price – budget revenues have not been affected. Export duty collections in the week through July 9 fell 28% and almost became the lowest this year – $42.6 million.
According to the results of the first half of the year, oil and gas revenues of the treasury fell by 47% to Br3.4 trillion. Total tax revenues to the federal budget fell by 12%, down to Br12.4 trillion.