Stronger than expected Russian oil product exports raises the prospect of a major boost to clean tanker tonne miles, according to shipbroker Gibson.
Russia is shipping about 225,000 barrels a day of more refined oils between February and April compared to the same period in 2022. The growth is driven by shipments from the Baltic Sea to the Middle East Gulf, it said.
Sharp increases in Russian products have also been seen to Turkey, North and West Africa, Latin America — mainly Brazil and Southeast Asia. About two-thirds of all Russian clean petroleum product [CPP] exports in the West originate from Baltic terminals, it said.
The ban imposed by European countries on refined oil products has contributed to an increase in tonne miles as barrels are travelling further.
The voyage from the Baltic port of Ust Luga to the main EU refining hub in northwest Europe took 3.5 days while trades to Turkey take two weeks and three weeks for the Middle East.
“The bigger picture is that Russia has successfully found alternative longer haul homes for its CPP offering the promise of a major additional boost to clean tanker tonne-mile demand going forward,” said Gibson.
The destinations where Russian exports have spiked are all outside of Europe, which banned imports of Russian oil products in February.
Ships and services provided by G7 nations can only be used if products are in line with price caps imposed at the same time of $100 per barrel for premium products and $45 for discounted ones.
But the changing nature of the tanker sector and the booming second-hand market has contributed to 75% of all Russian oil trade being unconnected with G7 countries, according to US officials.
Gibson said that with more tonnage being tied up in the Russian trades, supply is also being squeezed in the non-Russian mainstream market in a boost for shipping revenues.
But the changes caused by Russian trade flows have also dampened the market with cheaper Russian barrels into Africa and Latin America competing with exports from the US and Europe. Brazilian demand for US barrels has been limited because of the Russian competition, it said.
Other broader changes within the sector include a series of refinery startups in the Middle East that has increased the volume of products travelling from the Middle East, said French shipbroker BRS.
The Baltic Exchange’s clean tanker index, an average using six routes, has been volatile since the Russian invasion of Ukraine in February 2022 but has led to periods of sustained highs not seen for 15 years over the last year.
The index now sits at 762, little more than a third of the level in late December and only just up on the 696 points at the time of the invasion.
