China and Saudi Arabia Emerge as Largest Buyers of Russia’s Fuel Oil

As many Russian refineries completed planned maintenance, Russia raised its seaborne exports of fuel oil in July, sending a large part of the volumes to China and Saudi Arabia, which were joint top buyers of the Russian oil product, Reuters reported on Friday, citing data from LSEG. 

Total Russian shipments of fuel oil and vacuum gasoil (VGO) increased by 7% month-on-month in July, to 4 million metric tons, according to the data and trade sources who spoke to Reuters. 

Of these 4 million tons, China and Saudi Arabia imported 700,000 tons each, with exports to China rising by 18% from June and exports to Saudi Arabia near doubling in July compared to the prior month. 

Saudi Arabia uses a lot of fuel oil for electricity generation in the hot summer months when power consumption peaks with demand for air conditioning soaring.   

Part of the Russian fuel oil and VGO seaborne exports have seen ship-to-ship transfers and loadings on other vessels off the coasts of Malta and Greece, according to shipping data cited by Reuters. Most of the STS shipments are bound for Asia. 

Russia has pivoted to Asia in its seaborne exports of crude oil and petroleum products after the EU and Western embargoes on imports of petroleum from Russia following Putin’s invasion of Ukraine. 

As Russian crude and fuel shipments to Asia rise, so do Russian fuel export volumes via Africa to Asia.  

Russian exports of petroleum products to Asia via the Cape of Good Hope nearly doubled in July from a month earlier to an all-time high, according to LSEG shipping data reported by Reuters.

Since the end of 2023, many ship owners and vessel charterers have opted to use the longer route via Africa to avoid passing through the Red Sea, where the Iran-aligned Houthis have targeted Western and Israeli-flagged or owned vessels. 

Despite the fact that Russia isn’t being targeted by the Houthis, many vessels are not adding another risk by taking the Red Sea route to Asia. 

By Tsvetana Paraskova for Oilprice.com

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