Singapore: A record amount of Russian oil is on board tankers, with unprecedented amounts headed to India and China as other nations restrict imports because of the war in Ukraine.
According to Kepler, between 74 million and 79 million barrels were in transit and floating storage over the past week from the OPEC+ producer, more than double the 27 million barrels just before Ukraine’s February invasion. Asia overtook Europe as the largest buyer for the first time last month, and the gap is set to widen in May, according to the data and analytics company.
The sharp jump in Russian oil in transit by sea underscores how the global energy trade has been thrown into turmoil by the invasion, with the US, UK and several EU companies turning their backs on their cargo and Moscow forced to look for buyers in Asia. China and India have snatched millions of barrels from the country to take advantage of huge discounts on inflows.
“Some interested buyers in Asia are driven more by economics than by taking a political stance,” said Zhen Xie, a senior oil analyst at Kepler in Singapore. “That said, there has been an increase in US interest in India’s purchases of Russian oil, so there may be some downside risks to this trade flow, even though it is not likely to be affected significantly at present.”
According to Xie, combined Russian oil flows to Asia’s top two buyers, India and China, rose to a record in April, driven mainly by increased purchases from India. Although shipments are likely to be slightly lower this month, they will still lag behind last month’s record, she said.
If the European Union agrees to phase out all imports from the country by the end of this year, rising Russian maritime trade with Asia will increase the amount of crude oil at sea by 45 million to 60 million barrels, Industry consultant FGE said in a note this week.
While ships transporting crude are forced on long voyages – such as the major Urals – from Russia’s western ports to Asia rather than Europe, a one-way trip to China usually takes about two months.
According to Kepler data, as of May 26, about 57 million barrels of Ural and 7.3 million barrels of Russian Far East ESPO crude were seen on the water, compared to 19 million Urals and 5.7 million ESPO at the end of February. -bloomberg
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