Russia’s near-record diesel exports help lift refined fuel fflows

Russia’s oil-product exports are now on track to edge higher this month, as near-record diesel and rebounding naphtha shipments are set to offset lower flows of other fuels.

The market is keeping a close eye on trade figures for any signs of Russian output cutbacks, with Moscow keeping production data a state secret. The country’s crude shipments slipped to a six-month low in the latest four-week period, suggesting it’s finally making good on a pledge to cut supply to world markets. 

In the first 15 days of July, Russia’s refined fuel cargoes rose about 81,000 barrels a day compared with June’s total, according to data compiled by Bloomberg from analytics firm Vortexa Ltd. They’re at about 2.49 million barrels so far, heading for a three-month high amid a ramp-up in refinery operations in the country.

Earlier this month, the flows had been on course to slip marginally. Russian refiners are maximizing profits ahead of a cut in domestic fuel subsidies, which may mean some supplies are being diverted from the international market.

Here’s a breakdown of exports in the first half of July:

Shipments of diesel or gasoil — the top export product — rose 8.5% to about 1.27 million barrels a day. That’s near the 1.3 million barrels a day seen in March when flows reached the highest in Vortexa data since the start of 2016. Daily average flows are so far about 33% higher than year-ago levels.

Russian refiners have prioritized production and exports of diesel amid strong profits, further limiting gasoline output from the country’s relatively simple refinery setup, Energy Aspects said in a note.

Gasoline and blending component flows have more than halved from June’s total to just 45,000 barrels a day, which would be the lowest since December 2017. The government is considering fuel-export quotas to boost domestic supplies and limit price surges.

Exports of naphtha — a feedstock used in petrochemical plants and also gasoline blending — have recovered to about 395,000 barrels a day. That’s up 28% from June levels, when average flows plunged to the lowest in Vortexa data since the start of 2016. Most cargoes are heading to Asia and the Middle East.

Exports of refinery feedstocks remain weak. Flows are about 107,000 barrels a day so far, down from 116,000 barrels a day in June.

Fuel oil shipments — which account for more than a quarter of Russia’s refined fuel flows — slipped from June to about 671,000 barrels a day. Exports to Africa have gained, while cargoes signaling the Middle East have shrunk.

No jet fuel shipments have been observed for this month so far.

Export volumes are likely to be revised as new cargoes are observed for the rest of the month. Shipments in-transit may also update their final destinations.