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Russia’s War on Ukraine Changed Global Oil Trade. Here Is What It Looks Like Now – WSJ

Shipping routes for Russian crude highlight new era for energy markets (WSJ)
Shipping routes for Russian crude highlight new era for energy markets (WSJ)

Dan DeLorenzo and David Uberti, WSJ

NEW YORK
EnergiesNet.com 01 27 2023

Russia’s war on Ukraine has redrawn the global oil map, rerouting a fleet of skyscraper-size tankers on longer voyages as they shuttle crude shipments that are essential to the global economy. 

The Wall Street Journal analyzed data from the ship-tracking firm Spire Global that showed the paths of about 3,000 such vessels to find those leaving Russian ports across periods before and after the Russian invasion on Feb. 24. Using location-tracking signals shared by ships and authorities, the information shows how fallout from the invasion cut longtime trade ties and left the Kremlin rushing to find the money it needs to fund its war machine. 

So far Russia has been able to redirect many of its crude exports, but they are selling at a steep discount to a handful of buyers including India, China and Turkey. Longer shipping routes captured by Spire Global data, meanwhile, have stretched the global tanker market thin as a “shadow fleet” of ships emerges to help Russian exports skirt widening Western sanctions.

In February, the reshuffling will continue with a U.S.-led price cap and European Union embargo on diesel and other refined fuels from Russia. The Journal’s analysis of crude shipments offers a preview of why next month’s changes, which analysts say will pose even more complex logistical challenges, are injecting fresh uncertainty into energy markets.

Northern Europe
In 2021, tankers leaving Russia’s Baltic ports headed toward buyers in Scandinavia, the U.K. and the Netherlands, often unloading at Rotterdam, one of the world’s largest oil hubs.

Those quick trips largely stopped before a European Union ban on Russian seaborne crude imports last month. European refiners have turned to the Middle East, West Africa and the Americas for crude
Northern Europe

In 2021, tankers leaving Russia’s Baltic ports headed toward buyers in Scandinavia, the U.K. and the Netherlands, often unloading at Rotterdam, one of the world’s largest oil hubs.

Those quick trips largely stopped before a European Union ban on Russian seaborne crude imports last month. European refiners have turned to the Middle East, West Africa and the Americas for crude
The Atlantic
The U.S. barred Russian oil shipments in March, curbing tanker trips across the Atlantic Ocean to Gulf Coast fuel makers.
The Atlantic

The U.S. barred Russian oil shipments in March, curbing tanker trips across the Atlantic Ocean to Gulf Coast fuel makers.
The Suez Canal
Russia redirected many shipments through the Mediterranean Sea and Suez Canal as they head toward Asia.

That sent shipping costs skyrocketing last year, helping to push down the price of Russian oil. The country’s flagship blend of crude, known as Urals, traded recently at around $45 a barrel, according to Platts of S&P Global Commodity Insights. Brent, the global benchmark, commanded upward of $85.
The Suez Canal

Russia redirected many shipments through the Mediterranean Sea and Suez Canal as they head toward Asia.

That sent shipping costs skyrocketing last year, helping to push down the price of Russian oil. The country’s flagship blend of crude, known as Urals, traded recently at around $45 a barrel, according to Platts of S&P Global Commodity Insights. Brent, the global benchmark, commanded upward of $85.
Arabian Sea
That price differential is a potential win for refiners willing to buy Russian crude.

India, which imported almost no Russian oil before the war, is projected to average nearly 1.5 million barrels a day this month, according to the ship-tracking firm Kpler. The surge in related weekslong tanker voyages is causing a strain on the shipping market, according to Kpler analyst Matt Smith.
Arabian Sea

That price differential is a potential win for refiners willing to buy Russian crude.

India, which imported almost no Russian oil before the war, is projected to average nearly 1.5 million barrels a day this month, according to the ship-tracking firm Kpler. The surge in related weekslong tanker voyages is causing a strain on the shipping market, according to Kpler analyst Matt Smith.
China
Shipments from Russia’s eastern ports to China grew more common as Beijing expanded export quotas for refiners, pushing them to pump out diesel and other fuels.

'It is economics at its most brutal,' said Dave Ernsberger, head of market reporting and trading solutions at S&P Global Commodity Insights. 'China will buy Russian crude as cheap as it possibly can, and it will export its products to markets that don’t take Russian oil.'

Note: Vessels with noncontiguous data omitted. Source: Spire Global
China

Shipments from Russia’s eastern ports to China grew more common as Beijing expanded export quotas for refiners, pushing them to pump out diesel and other fuels.

‘It is economics at its most brutal,’ said Dave Ernsberger, head of market reporting and trading solutions at S&P Global Commodity Insights. ‘China will buy Russian crude as cheap as it possibly can, and it will export its products to markets that don’t take Russian oil.’

Note: Vessels with noncontiguous data omitted. Source: Spire Global

Write to Dan DeLorenzo at dan.delorenzo@wsj.com and David Uberti at david.uberti@wsj.com

wsj.com 01 27 2023

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