Russian Oil Heads East as EU Embargo Takes Hold

The European Union's full embargo of Russian oil products came into effect on Feb. 5, but data from traders and Refinitiv show that the bulk of Russia's fuel oil and vacuum gasoil (VGO) is already being shipped to other regions, mostly in Asia.

In January, less than 5% of Russian fuel oil and VGO was shipped to EU countries, including some 100,000 tonnes to Agioi Theodoroi in Greece, about 80,000 tonnes to the Latvian port of Ventspils and 30,000 tonnes - to the Italian port of Augusta.

"No need to say, that`s easy enough to divert those remains to the other destinations," one trader said.

The EU began restricting imports and transit of some fuel oil from Russia six months ago, under custom code 2707, with a full ban coming into force this month, in response to the dispute in Ukraine. The Group of Seven (G7) industrialized nations has also imposed a price cap on Russian fuel shipments.

In response, traders have diverted cargoes to Asia and the Middle East and increasingly used ship-to-ship (STS) loadings to transport their oil.

In December and January total Russian exports of fuel oil and VGO were about 4.2 million-4.5 million tonnes each month.

According to Refinitiv data, Russia exported more than 0.8 million tonnes of fuel oil in December 2022 to India, which buys the oil products to process at cokers in its refineries. In January 2023, fuel oil shipments from Russia to India totalled at least 0.5 million tonnes.

STS loadings near the Greek port of Kalamata, which is one of the main destinations for Russian fuel oil and VGO exports, surged to 8.2 million tonnes in 2022, up from 1.4 million tonnes in the previous year.

In January 2023, Russia sent 0.5 million tonnes of dirty oil products to STS near Kalamata. Traders also use STS loadings in Skagen (Denmark) and Ceuta (Spain).

Large volumes of fuel oil and VGO from Russia were also diverted last year to Singapore, Malaysia, China, Emirates, Turkey, Senegal and South Korea, Refinitiv data shows.

(Reuters - Reporting by Reuters; Editing by Sharon Singleton)