Oil at Sea Surges in Fresh Sign of Russian Flows Going Farther

By Bloomberg

Apr 13, 2023

image is BloomburgMedia_RSZJDDT1UM0W01_13-04-2023_06-14-39_638169408000000000.jpg

A support vessel flying an Iranian national flag sails alongside the oil tanker 'Devon' as it prepares to transport crude oil to export markets in Bandar Abbas, Iran, on Friday, March 23, 2018. Geopolitical risk is creeping back into the crude oil market. Photographer: Ali Mohammadi/Bloomberg

(Bloomberg) -- The volume of crude oil on tankers at sea jumped to the highest since 2020, the latest demonstration of how Russian crude is sailing longer distances to new buyers.

Oil on water — the volume of crude sailing to a destination or floating idle at sea — rose to 1.27 billion barrels last week, according to Vortexa Ltd. data.

The increase reflects the recasting of the global oil market following Russia’s invasion of Ukraine. The figure is up by almost 230 million barrels since August as Moscow diverts supplies to buyers farther afield, especially India and China, while Europe has had to pull in more crude from elsewhere. In addition, record US exports have lengthened the distances ships are sailing to deliver supplies.

“Russia is diverting larger quantities of its crude to non-EU countries, while Europe is importing its crude from farther locations,” UBS Group AG analysts including Giovanni Staunovo wrote. “Longer routes mean the shipped oil spends more time on a tanker.”

Still, there’s reason to think the increase may be about to turn. OPEC+ announced plans to cut production by 1.7 million barrels a day, a move that’s set to reduce volumes of seaborne oil in the coming months.

By Alex Longley