India received 30% lesser barrels of oil from Russia relative to peak imports

19 Jul 2022 , 10:13 AM

There are hesitant indications that Russia's long-standing practice of diverting crude oil from Europe to Asia is failing. Nearly 30% less has been shipped to China and India than at their post-invasion peak.

The US's self-sanctioning and pressure on India, China, and other importers may not yet have a lasting effect, but there are some early indications that the Asian countries may not be able to entirely replace Russia's European customers. When rolling averages are used to smooth out week-to-week variances, the trend can be seen most clearly.

Before the decrease in supplies impacts the Kremlin's war chest severely enough to make President Vladimir Putin reconsider his invasion of Ukraine, there is still a long way to go. Rising crude prices increase Russia's export duty revenues and somewhat offset the decline in crude flows; it is expected that this revenue is still in excess of $160 million each week. Even though it is now higher than it was before the invasion by about 25%, it is still lower than it was at its highest point in April.

While President Joe Biden's plea for additional oil from Saudi Arabia and its OPEC partners was met with a somewhat ambivalent response, a US-led plan to impose a price restriction on Russian oil exports is currently under development but faces substantial challenges. Any boost won't come from Saudi Arabia and the United Arab Emirates alone, but rather from the OPEC+ group of oil producers. Any additional supply is anticipated to be small given Russia's dominant position in that group.

The biggest predicting firms don't see a decline in global oil demand that would lower prices, which is the best hope for cutting the Kremlin's oil income.

Because of loading schedules, maintenance, weather, and other factors that can affect flows, gauging exports through vessel movements is exceedingly noisy. Longer-running averages can reduce some of the noise, but not all of it.

According to tanker tracking data analyzed by Bloomberg, the rolling four-week average of exports shows that Russia's seaborne volumes have been declining since mid-June.

Based on that, flows decreased over the four weeks leading up to July 15 to 3.24 million barrels per day. Since mid-June, they have decreased by 467,000 barrels per day or 13%.

More than half of all the crude supplied from Russia is being consumed by Asian nations, with China and India dominating the region. For the past six weeks, between 55 and 56% of Russia's total seaborne exports have gone to Asia. This number is down from a high of 63% in the four weeks leading up to April 15 and includes tanker volumes traveling from ports on the Baltic and Black Seas to the Suez Canal.

The average flow of Russian crude to Asia in the four weeks leading up to July 15 was the lowest in the previous fifteen weeks based on current destinations. That still holds true if all the crude on tankers that haven't yet signaled whether or not they're headed to the area do so in the upcoming weeks.