Russia’s 2023 crude exports ended the year high with the four-week average shipments climbing to a record high since early November, and weekly flows surging the most since July.
In the four weeks leading up to December 31, Russia shipped over 3.4 million barrels of crude a day, according to Bloomberg. This is an increase of 230,000 barrels a day from the period leading to December 24. The weekly average jumped by over 560,000 barrels daily to over 3.7 million.
The crude shipments four-week average was around 120,000 barrels a day lower than the period between May and June, which is the baseline Russia uses to make reduction decisions to honor its OPEC+ commitments. OPEC+ members have been engaging in production cuts to drive up oil prices since late spring which yielded mixed results.
In a statement, Moscow said it would reduce its oil exports by 500,000 a day below the May through June average during the first quarter of 2024. This comes after Saudi Arabia expressed its commitment to prolong its unilateral one-million-barrel-a-day cuts.
Other members of OPEC+ are extending cuts, as well. Russia’s cuts will be split between shipments of crude, reducing them to 300,000 barrels a day, and refined products, according to Deputy Prime Minister Alexander Novak.
December reductions were marked at 300,000 barrels a day shared between crude and refined products but in no defined proportions. This complicates assessing Russia’s commitment to OPEC+ cuts. This is not a unique dilemma as keeping the cartel in sync has historically been difficult.
Around 1.7 million Russian crude exports pass through the Red Sea, which has become a risky shipping route after Houthi rebels started attacking ships passing through the critical waterway. It’s unlikely that Russian oil tankers would come under attack as Russia is allied with Iran which backs the Houthis, but being hit by mistake is still a possibility for Russian vessels.
Russia’s Sokol crude shipments to India have been experiencing disruptions, with five out of six ships headed for Indian ports delayed.
In response, some cargoes were redirected to other ports, and in another blow to Russia’s oil processing, storm warnings in the Black Sea have contributed to a decline in the country’s oil refining efforts.
The pressure piles on the Russian oil sector, with crude exports to European countries decreasing significantly following Ukraine’s invasion in 2022.
Exports to Turkey and Bulgaria have remained steady, but Bulgaria has plans to end importing Russian oil imports by March, nine months ahead of the EU sanctions exemptions deadline.
Russia’s export duty revenues from crude jumped to their highest levels for the year but plans to abolish them in 2024 as part of tax reform are being considered. Inflows to the Kremlin’s war chest from crude export duty reached $89 million in the seven days to Dec. 31.
