Russian oil exports recover to three-month high despite OPEC+ pledges

Russian oil exports rose in September with crude flows recovering to a three-month high, according to tanker tracking data, despite a pledge by Moscow to boost its compliance with OPEC+ output cuts.

Crude shipments from Russian ports averaged 3.48 million b/d in September, up 165,000 b/d or 5% from August and from an eleven-month low of 3.24 million b/d in July, according to S&P Global Commodities at Sea.

The biggest increase in crude exports during September was to Russia's top oil buyer India, with flows to Indian ports recovering by 270,000 b/d month on month to 1.92 million b/d. Urals crude exports from Russia's Baltic ports of Primorsk and Ust-Luga saw the biggest month-on-month increases while Urals flows from Novorossisk on the Black Sea and ESPO crude from Kozmino fell, the data shows.

Russia has promised to compensate for overproducing through the first half of 2024, when it pledged to implement deeper OPEC+ cuts. The pledge to OPEC+ includes a transition to crude production rather than crude export cuts during the third quarter. Russia on average produced 480,000 b/d above its output target during the first six months of 2024, according to assessments by secondary sources, which include the Platts OPEC+ Survey from S&P Global Commodity Insights.

The rising crude exports in September came as differentials for Russia’s flagship Urals crude remained stable, being valued at a $12.3/b discount to Dated Brent through the month. Platts, part of S&P Global Commodity Insights, assessed Urals on a FOB Primorsk basis at a $12.3/b discount to Dated Brent on Oct. 3, up from a post-Ukraine invasion low of $11.9/b on Aug. 7.

Product exports

Meanwhile, Russian oil product exports recovered from a post-pandemic low in September, according to CAS data, as the peak summer demand season ended but Moscow's ongoing gasoline export ban limits the export recovery.

Seaborne Russian export loadings of diesel, fuel oil, naphtha and other refined products average 2.16 million b/d, according to the data, up 8% or 166,000 b/d from the recent low in August.

A resurgence in flows to Turkey, Singapore, and China pushed Russia's key gasoil/diesel exports back above 700,000 b/d to 729,000 b/d in the month with Turkey and Brazil still the biggest buyers of Russian diesel.

The frequency of Ukrainian drone attacks on Russian refineries has decreased in recent months, with a Sept. 1 attack on Gazprom Neft’s Moscow refinery where repair works have already been completed. No damage was reported to Russian oil reserves since a depot strike in Belgorod on Sept. 8.

Although Russia's gasoline exports remain restricted, there is growing speculation that its export ban may be lifted before the announced end date of Dec. 31.

Russia's demand for refined products remains robust, bolstered by a bullish economic outlook (+3.8%), increased industrial activity (+4.6%), and the ongoing war effort. Russia’s gasoline demand is projected to rise by 4.5% year on year in 2024, while diesel demand is expected to surge by 11%, according to forecasts by Commodity Insights.