Russia’s Feb oil products exports decline amid drone attacks; fuel oil flows hit

Russia's seaborne exports of petroleum products fell amid Ukrainian drone attacks in February, with tanker tracking data suggesting lower fuel oil and residue flows to the OPEC+ producer's top customers.

S&P Global Commodities at Sea figures show the country's overall product exports reached 2.39 million b/d last month, down from 2.59 million b/d in January but comparable to the 2024 average of 2.37 million b/d.

Exports of fuel oil and residues decreased to 675,000 b/d in February from 897,000 b/d in January, with India-bound exports down 57% to 60,000 b/d, China-bound down 60% to 38,000 b/d and Turkey-bound down 68% to 20,000 b/d.

Ukraine has launched a series of drone strikes on Russia's oil and refining infrastructure since late January, targeting the 178,300 b/d Syzran refinery, the 240,000 b/d Tuapse refinery, the 342,000 b/d Ryazan refinery and an oil depot in Krasnodar, among others.

Market sources reported that the facilities suffered various degrees of damage. Ukraine has proposed to halt attacks on Russia's energy infrastructure in a temporary truce in coordination with France, the UK and US.

"A Russia-Ukraine ceasefire ... would have the potential to shift refined products trade," S&P Global Commodity Insights analysts wrote in a recent note. "An easing of US sanctions could revive Russian-origin feedstocks, flows such as vacuum gasoil into the US."

Russia's VGO exports amounted to 82,000 b/d last month, of which 20,000 b/d were destined for South Korea and 16,000 b/d for Egypt, according to CAS.

Commodity Insights analysts suggested that any truce is unlikely to have an immediate impact on Russian diesel exports, which have found new buyers in Turkey and Brazil following an EU embargo in February 2023.

CAS data shows Russia's exports of clean products amounted to 1.66 million b/d in February, nearly unchanged from 1.68 million b/d in January. Diesel/gasoil exports marginally fell to 951,000 b/d from 985,000 b/d.

"If a fully agreed-upon ceasefire includes all key stakeholders, trade patterns may return to pre-conflict routes," the analysts said. "However, this is an unlikely scenario."

More Russian crude

Russian crude exports slightly increased to a three-month high of 3.24 million b/d last month from 3.18 million b/d in January, with the country's oil firms willing to accept deeper discounts amid Western sanctions to maintain sales.

CAS data shows the country's exports to India, its top customer, rose by 233,000 b/d to a four-month high of 1.76 million b/d last month, while exports to China increased by 45,000 b/d to 1.04 million b/d.

The development came as Russian outflows to Turkey fell by 139,000 b/d to 220,000 b/d, with Turkey's largest refiner Tupras halting imports of Urals -- Russia's flagship crude grade -- due to a US sanctions clampdown.

To undermine Russia's war chest against Ukraine, the US Treasury sanctioned more than 180 ships on Jan. 10, while the EU blacklisted 74 ships and the UK sanctioned 40 ships on Feb. 24 for engaging in illicit Russian shipments.

But market participants have expected the enforcement to result in only short-term disruptions to cargo flows, with Russia still controlling a larger number of unsanctioned ships in its shadow fleet and even able to tap into Western shipping capacity when its crude prices are below the G7 price cap.

The discount of Urals on an FOB Primorsk basis to Dated Brent widened from $11.3/b Jan. 9 to $15.4/b Feb. 25, a level not seen since May 2024, according to Platts, part of Commodity Insights. The discount has since narrowed to $14.5/b on March 4. Urals' flat price has been below the G7 cap of $60/b since Feb. 21.

On the Pacific coast, the discount of Russia's ESPO crude on a FOB Kozmino basis to Dubai dropped nearly $10/b to $11.50/b on Jan. 20 before recovering to $5.8/b on March 5.