More Russia oil may be coming off the market - Dec 16

[dan_s]

If this takes a million bpd of Russian oil off the global oil market it should have an impact on global oil prices. Also, most of the OPEC cartel countries are not able to produce up to their new lower quotas. The global oil market is tight heading into the coldest part of the winter heating season.

(Bloomberg) -- There are tentative signs that oil tanker
companies are avoiding sending their ships to collect crude from
a key Russian port in Asia following G-7 sanctions targeting
Moscow’s petroleum revenues.

Since Dec. 5, buyers of cargoes from Russia have only been
allowed to access industry standard insurance and an array of
trade-critical services if they pay $60 a barrel or less.
Shipments of the key ESPO grade from the Asian port of Kozmino
are about $10 above that, meaning they need to make alternative
arrangements.

Since the cap began, ESPO, which stands for the initials of
a pipeline that takes the oil from east Siberia to the Pacific,
has seen loadings halve from a month earlier, tanker tracking
compiled by Bloomberg show. By contrast Urals, a much larger
grade exported from western Russia, is flowing freely to
customers in Asia — aided by the fact it fell far below the $60
threshold a few weeks before it was introduced.

Tankers appear to be shying away from the Asian grade,
though. In the 10 days since the measures began, 4.4 million
barrels have been loaded onto tankers at Kozmino, the tanker
tracking compiled by Bloomberg shows. In the same period a month
earlier, there were 8.8 million barrels loaded.

People involved in trading ESPO said it’s too soon to be
confident that the observed drop in flows reflects something
structural. However, weather conditions haven’t been
particularly bad and there doesn’t appear to be many candidate
ships in place to collect cargoes in the coming few weeks.
Tanker tracking data is always volatile, depending on the
timings of loadings, and the comings and goings of individual
tankers.

Big Shipowners

Shipbrokers and traders also said that there are signs
that ESPO sellers are struggling to secure tankers for cargoes
purchased at more than $60 a barrel.

At least two large and well-known shipowners, China Cosco
Shipping Corp. and Greece-based Avin International Ltd. have
stepped back from moving ESPO crude since Dec. 5, according to
shipbrokers. Emails sent to both companies weren’t answered.

Their absence has taken at least five tankers out of the
regular pool of ships that move the grade, they said. That
leaves charterers to work with smaller independent owners who’re
still willing to handle the trade. If charterers continue to
face headwinds with the booking of tankers, flows could be
impeded, they said.

ESPO and Sokol, another grade that’s exported from eastern
Russia, currently trade above the $60 a barrel threshold that
gives access to insurance and G-7 services.

Urals Normal

Shipbrokers said tanker bookings for Russia’s flagship
Urals crude from western ports are proceeding more normally. The
grade at about $45, according to data provided by Argus Media.
Tanker tracking also suggests no obvious disruption to flows of
the grade.

Traders are watching closely to see if Russian crude
exports can be maintained and how Moscow will respond if
supplies do get disrupted.

The stability of Russian exports is crucial as the US and
rest of G-7 work on ensuring security of global oil supplies
ahead of the Northern hemisphere winter while simultaneously
attempting to deprive the Kremlin of funding for its war in
Ukraine. A sharp loss of output could backfire on the west if it
boosts wider oil prices and reignites inflation.

About half the ESPO cargoes scheduled for loading in the
rest of this month have yet to secure tankers, according to
shipbrokers. That’s a bit slower than usual, they added,
attributing it to the smaller pool of willing tankers operated
by a smaller number of owners.

It’s possible that tankers which previously handled oil
from sanctioned regimes such as Iran and Venezuela — the so-
called dark fleet — would be booked, shipbrokers said.
The vessels that loaded ESPO at Kozmino sailed toward
China, according to the tracking data. Some are owned by
Russian, Indonesian and Turkish firms, while others don’t
disclose their ownership.

Several cargoes of Sokol, which loads from the eastern
Russian port of De Kastri, underwent ship-to-ship transfers off
Yeosu in South Korea.

--With assistance from Sarah Chen.