Russia’s crude shipments slump

Bloomberg

Russia’s oil exports fell to a six-week low, reversing a previous trend and providing a sign of what’s to come as it prepares for a production cut of 500,000 barrels a day next month.
Aggregate flows of Russian crude fell by 562,000 barrels a day, or 16%, in the seven days to February 10, even as exports from its Baltic ports edged higher. Combined shipments from the Arctic and the Pacific were down by half a million barrels on a daily basis, while those from the Black Sea also slumped. The less volatile four-week average fell for the first time since early January.
Moscow has been keen to portray its production cut, which Deputy Prime Minister Alexander Novak announced, as retaliation for the Group of Seven price cap on its exports. However, it may also reflect the difficulty Russia faces in maintaining crude oil shipments to its four remaining customers — China, India, Turkey and Bulgaria. Falling revenues have prompted the Kremlin to propose changes to the way its crude prices are calculated for tax purposes.
The volume of crude on vessels heading to China and India — plus small flows to Turkey and the quantities on ships that haven’t yet shown a final destination — fell in the four-week period, to an average 3.07 million barrels a day. While that’s down slightly from the period to February 3, it is still the second-highest amount observed since Bloomberg began tracking the shipments at the start of 2022.
Flows to China are little changed since before Russia invaded Ukraine almost a year ago. Historical patterns suggest that most of the cargoes currently identified as “Unknown Asia” or “Other Unknown” will end up in India.
Inflows to the Kremlin’s war-chest from crude-export duties have plunged since the start of the year. While lower shipments and an easing of crude prices have played a part in that drop, so too has a widening gap between global benchmark Brent and reported prices for Russia’s key Urals grade, which are used to
calculate tax rates.
Worried by falling revenues, the Russian government has proposed switching from using Urals prices reported by Argus to setting a tax reference price as a discount to Brent. It is suggested that this will be $34 a barrel for April, narrowing to $25 a barrel by July.