Russian oil product exports slump to multi-year low after refining attacks

Russian oil product exports slumped to a post-pandemic low in the first half of April, according to tanker tracking data, as the impact of drone strikes on its refineries and flooding weigh on the country's key export commodity.

Seaborne Russian export loadings of diesel, fuel oil, naphtha, and other refined products averaged 1.81 million b/d during the week ending April 14, according to S&P Global Commodities at Sea, a 560,000 b/d slump on the month and more than 830,000 b/d below January levels when Ukraine began a barrage of long-range drone strikes on Russian refining capacity.

Ukrainian drones had struck more than 1.6 million b/d of Russia's Western refining capacity by the end of March with some 1 million b/d of processing capacity estimated to have been forced offline due to the attacks.

But since the April 2 hit on Tafneft's 340,000 b/d Taneco refinery, no further strikes have been reported and Russia has repaired some of the facilities.

Some 800,000 b/d of refining capacity remained offline as five key facilities have yet to complete repairs, according to S&P Global Commodity Insights estimates. Of the total, some 200,000 b/d of gasoline production and 300,000 b/d of diesel production is estimated to remain offline.

The April oil product export slump on March levels was led by fuel oil (down 267,000 b/d), diesel (down 181,000 b/d), and naphtha (down 117,000 b/d), the data showed, with the fall partly offset by higher exports of jet and VGO.

Regional, the oil export flows the biggest falls from Russia's Baltic ports of Ust Luga (down 198,000 b/d,) and St Petersburg (down 111,000 b/d), and the Black Sea terminal of Kavkaz (down 105,000 b/d).

"While Russian officials continue to dismiss the possibility of a gasoil/diesel export ban, reduced processing rates have stifled loadings. After climbing to more than 1 million b/d less than one month ago, gasoil/diesel exports have struggled for three consecutive weeks," oil analysts at S&P Global Commodity Insights said in a note.

Russia has been scrambling to plug any regional fuel supply shortage by prioritizing shipments of oil products via rail, according to local reports.

The energy ministry has said it was also discussing the rescheduling of refinery turnarounds with oil companies and boosting processing at refineries which are still operating normally.

Crude flows

As Russia struggles to repair its damaged refineries, oil markets have remained focused on the impact on crude exports.

Market watchers expected some additional crude flows to be backed out by Russia depending on whether the damaged refineries are linked to domestic fuel supply or export infrastructure.

The latest tanker data suggested that following a sharp fall in the first week of April, Russia's weekly seaborne crude loadings reverted to its longer average by April 15.

Seaborne crude flows in the week to April 14 surged by 600,000 barrels a day to 4.05 million b/d, the data shows, up from an average of 3.58 million b/d in 2023. During the first two weeks of April, however, seaborne crude exports averaged 3.53 million b/d, down some 300,000 b/d on March and in line with the yearly average.

Meanwhile, Russian oil on water has retreated from record highs in recent weeks despite support from longer voyages for products around the Cape of Good Hope to avoid ongoing threats to shipping in the Red Sea.

Floating shipments of Russia's Sokol crude, which built up after they were turned away by Indian refiners due to sanctions and currency concerns, has fallen sharply, the data showed. Some 1.5 million barrels of Sokol were on water as of April 16, down from 4.4 million barrels at the end of February, CAS data showed.

As of April 16, more than 180 million barrels of Russian crude and oil products were at sea, according to CAS, down from a recent high of 216 million barrels in late February. Of the total, products on water stood at 72 million barrels with products making up the remaining 109 million b/d.