Russia’s fuel oil shipments went mostly to Saudi Arabia and India in July as Asia and the Middle East remain the key outlets for Moscow’s fuel oil and vacuum gasoil (VGO) amid import bans and embargoes in the West.
Russia’s oil products have been banned in the EU and other Western countries since 2023, so Moscow has redirected most of the shipments to Asia and the Middle East.
Saudi Arabia, which runs fuel oil in power plants to meet soaring air-conditioning demand in the desert summer, and India, whose refiners run fuel oil as a cheap alternative of Russia’ Urals grade, were the largest buyers of fuel oil from Russia last month, Reuters reported on Tuesday, quoting LSEG data and trade sources.
Fuel oil shipments from Russia to Saudi Arabia were around 1.1 million metric tons last month, essentially flat compared to June, according to LSEG data cited by Reuters.
Saudi Arabia has established itself as the top importer of Russian fuel oil as it prefers to use low-cost petroleum products in power plants, which leaves more of its own crude for exports.
India, for its part, saw last month a jump in fuel oil shipments from Russia.
Departures of fuel oil and VGO cargoes from Russian posts with destination in India jumped to about 600,000 tons, up by 65% compared to June, per the LSEG data.
Indian refiners use fuel oil and vacuum gasoil as alternatives for feedstock at refineries. The spike in July shipments from Russia could be partially due to the narrowed discount of Urals to Brent last month.
The price gap that once made Russian Urals crude a go-to for Indian refiners was falling for most of July, with traders saying the discount on Urals oil for August delivery to India had narrowed to just $1.70–$2.00 per barrel below dated Brent—the tightest spread since Russia invaded Ukraine in 2022.
By Charles Kennedy for Oilprice.com
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