LONDON (BLOOMBERG) – Europe’s resolve to stop buying Russian crude may be starting to ebb.
Mainland oil refineries took in 1.84 million barrels of crude a day from Russia last week, according to tanker tracking data compiled by Bloomberg.
It was the third consecutive weekly increase and took flows from Russia to Europe, including Turkey, to their highest level in nearly two months.
Part of it was Litasco, the business unit of Russia’s largest oil producer, moving barrels to the company’s refineries, and part of the additional purchase from Turkey. Beyond that, however, the continued and steady declines appear to have slowed.
The developments suggest that companies and countries that were unwilling to buy Russian have already backed down, leaving the market to others who are happier to do so. Russian oil plunged into huge discounts after the country invaded Ukraine as some companies stopped buying.
China and India are still the biggest buyers of Russian crude, according to weekly tracking data.
With all the cargo being loaded at ports on the country’s Pacific coast heading to China, Asia now absorbs half of all crude shipped from the country.
This represents about a third at the beginning of the year.
Rough shipments to Asia are dominated by flows to just two countries, China and India. Ocean shipments to China are averaging about one million barrels a day, down from a year-to-date low of 600,000 barrels a day in the four weeks to Feb. 18.
India has emerged as the savior of Russian maritime crude exports, averaging volumes of more than 600,000 barrels per day in the four weeks to June 17, up from just 25,000 barrels per day at the start of the year.
Beyond India, Russia has yet to find significant new buyers for its rough in Asia.
Russia has lost nearly two-thirds of its maritime crude market in northern Europe, but the volume it ships there has leveled off after its initial dip after Russian troops attacked Ukraine.
Shipments to the region averaged about 450,000 barrels per day in the four weeks to July 17, compared to nearly 1.25 million barrels per day in the first four weeks of the year, but have changed little over the past month.
Most countries have almost completely halted imports of Russian crude by sea, well ahead of European Union trade sanctions due to take effect in December.
The situation in the Mediterranean is very different. Russian crude shipments to the region have skyrocketed.
A big part of the reason is the shipment of Russian crude to Russian refineries in the region, particularly ISAB’s Lukoil plant on the Italian island of Sicily. Turkey has also stepped in to take a lot more Russian crude that has been diverted to the region from northern Europe.
It remains to be seen what the ISAB will do when the EU ban on Russian crude transported by sea comes into force in December. Until then, with no legal impediments to its purchases and few to no alternatives to its supply of Russian crude, shipments are unlikely to drop.
The Mediterranean picture is repeated in the Black Sea, again driven by increased shipments to a Lukoil-owned refinery in Bulgaria.
While flows to Romania have changed little since the start of the year, those to Bulgaria are two and a half times greater than in January and early February.