Demand continues to cool, Russian shipping crude oil exports hit the biggest decline since July

The Zhitong Finance App learned that the four-week average of Russian marine crude oil exports showed the biggest decline since July. The four-week average marine crude oil shipment volume fell to its lowest point in two months. The import scale of India, the main buyer, can be described as a sharp drop. It also highlights the continued decline in global crude oil demand in the second half of the year. Global demand, including major Asian demand countries, continues to cool down, which can be described as the main logic that has caused Brent crude oil futures prices, the international crude oil benchmark, to continue to weaken in recent months.

Statistics show that as of November 24, the four-period average daily export volume of Russian crude oil dropped sharply by about 150,000 barrels. This is the fourth time in five weeks that there has been a sharp decline under this statistical benchmark, although the weekly benchmark export volume increased slightly from the previous seven days. Compared to simple weekly statistics, the four-week average marine crude oil transportation flow largely excludes fluctuating disturbances.

Statistics show that the decline in shipments was mainly concentrated in western Russian ports, and the throughput over the past two weeks dropped by about 25% compared to the previous month's average. In the last week, the Novorossiysk port's loading plan was interrupted for five days, probably related to maintenance work, affecting the transportation of goods from the Black Sea.

Most of the goods from export terminals in the western part of Russia are shipped to India. Average shipments around the Baltic Sea, the Arctic, and the Black Sea continue to drop sharply, reflecting the continued decline in the amount of crude oil shipped to this South Asian country, which highlights the decline not only in India's demand for crude oil in the Middle East region, but also in Russia's demand for cheap crude oil.

As of November 24, the initial inflow statistics for India were below 1 million barrels per day. Although the volume of inflows is likely to increase as the destination of the port of discharge becomes clear, it will still be reduced by at least 500,000 barrels per day compared to the four weeks ending mid-October.

Prior to discussions between OPEC+ oil ministers on Sunday, overall oil production, including crude oil and refined oil products such as diesel, had dropped sharply, and outsiders expect them to postpone plans to begin increasing oil supply to the market for the third time. Russia promised to cut production further in October and November to make up for excessive crude oil and refined oil production in the past. Therefore, apart from the decline in global demand affecting the scale of Russian crude oil exports, the sharp decline in the country's crude oil exports may reflect efforts to fulfill this promise to reduce production to a certain extent.

According to a Russian government statistic, Russia's crude oil production last month was close to Russia's production reduction target in the OPEC+ organization.

Seaborne Crude Oil - Russia's Seaborne Crude Oil Shipment Flow (2021-2024)

Additionally, the UK government has added two other Russian insurers — AlfaStrakhovanie Group PLC and VSK — to the list of sanctioned entities. Three insurance companies have previously been included in the list. Currently, the Indian government has approved four of these companies to provide indemnity insurance for ships docking at the country's ports. According to information, the London authorities will also add 30 more large tankers to the list of ships sanctioned for transporting Russian oil. Of these, 14 have been sanctioned by the US or the European Union.

According to ship tracking data and port agency statistics reports, a total of 27 tankers carried about 20.5 million barrels of Russian crude oil in the week ending November 24. This is a slight increase compared to the 19.8 million barrels loaded by 26 tankers the previous week. This week, two cargo ships carrying Kazakh KEBCO crude oil were loaded at Novorossiysk Port in the Black Sea region, and one at Ustyluga Port in the Baltic Sea.

Tankers load crude oil at Russian terminals — 27 tankers loaded Russian crude oil in the week ending November 24

In the week ending November 24, the daily crude oil transportation volume increased by about 100,000 barrels compared to the previous week, to 2.93 million barrels. This increase was due to increased traffic from the country's Arctic ports, while Pacific shipments remained unchanged. Furthermore, the import scale of India, the main buyer, can be described as having dropped sharply, and the average shipping flow of Russian crude oil in four weeks throughout Asia also declined continuously due to cooling demand.

The four-week average shipping crude oil traffic, which is less volatile, showed the exact opposite trend, marking the biggest decline since mid-July. The average daily transportation volume for the four-week period was only 3.12 million barrels, down about 150,000 barrels from the same period on November 17.

So far this year, the average daily shipment volume of Russian crude oil is about 60,000 barrels, which is about 2% lower than the average for the whole of 2023.

Russian Seaborne Crude Oil - Average four-week shipping volume of Russian crude oil by destination (2021-2024)

Russia terminated its export target at the end of May and instead chose to limit production, which is in line with the OPEC+ oil producer group's oil partnership goals. After some planned production cuts were extended for the second time, the country's production target was set at 8.978 million barrels per day until the end of December.

Moscow also promised to further increase crude oil and product oil production cuts in October and November of this year and from March to September 2025 to make up for the scale of production exceeding its OPEC+ quota earlier this year.

The average weekly price of Russia's main crude oil flow rose slightly compared to the previous statistical week. Coupled with a slight increase in weekly exports, the Kremlin's crude oil-related revenue also increased. In the week ending November 24, these factors together contributed to an increase in the total value of Moscow crude oil exports by about 75 million US dollars, reaching 1.33 billion US dollars.

According to Argus Media's statistics, the export value of Russian Baltic ports increased by about 2.30 US dollars/barrel over the previous month. Compared with the previous statistical week, the price of loading Ural crude oil from the Black Sea rose by about 2.10 US dollars/barrel, and the price of the key Pacific grade ESPO increased by about 0.90 US dollars/barrel. Delivery prices in India increased by around $2/bbl.

The four-week average income also showed a diametrically opposite trend, falling from $1.47 billion as of November 17 to around $1.4 billion a week.

On this basis, the price of Russian oil exports from the Baltic Sea fell by about $0.10 per barrel in the four weeks up to November 24 compared to the four weeks ending November 17. The price of ESPO, the main Pacific grade, fell by about $0.20 per barrel. In contrast, the price of exports from the Black Sea rose slightly, and the price of exports to India also increased.

Export value - total revenue from Russian crude oil exports by sea (2022 - 2024)