Weather-related delays at Russian ports cause rail backlogs

Cold weather has resulted in delays in offloadings of oil products at Russian ports, leading to a railway backlog, according to market sources.

Some ports have introduced restrictions requiring longer transshipment from railcars at port stations for heavy products. Freezing temperatures require fuel oil on rail cars to be heated before being discharged into pipelines that take it to tankers.

The longer waiting times have had a knock-on effect on the railways leading to the ports, with both the ports and railways introducing restrictions at some ports on further arrivals by rail.

Delays have affected ports on the Black Sea and the Baltic Sea, as well as in the Far East, although not all of these have imposed restrictions.

Currently, there are restrictions at the fuel oil terminal at the Black Sea port of Novorossiisk, with the Azov-Black Sea basin facing the most difficult conditions.

In addition, loadings at the oil terminal at the port of Novorossiisk have been hindered by stormy weather at sea. A new storm was declared Dec. 22, with all loadings suspended. The last storm ended in Novorossiisk Dec. 21, with the ongoing inclement weather causing loading delays for both crude and diesel tankers, according to Russian crude pipeline operator Transneft.

In the Baltic Sea, delays have affected the oil terminal at Ust-Luga, where some restrictions have been introduced, as well as the St. Petersburg and Vysotsk oil terminals.

Meanwhile, loadings in the Far East are gradually returning to normal.

The rail congestion at Russian ports has been contributing to tightness in the European naphtha market as well, since Russia is one of the largest naphtha exporters to Northwest Europe from the Baltic region particularly. Naphtha commonly also arrives from Black Sea ports, with substantial volumes however destined for markets in the Far East.

An estimated 491,000 mt of naphtha is set to reach Northwest Europe from Baltic ports in December, against 571,000 mt total in November, according to Kpler shipping data.

"With the ongoing rail congestion in Russia, flows could be lower than expected," a source said.

Amid already limited supply, with reduced domestic runs and lower imports from the USGC, naphtha has seen further support, with the front-month crack spread reaching $2.68/b on Dec. 21, the highest since Oct. 25.

Separately, Russia's Federal Antimonopoly Service has approved a 6.8% hike in railway tariffs for 2022, which applies also to the shipment of oil products.