Moscow: Saudi Arabia emerged as the leading importer of Russian sea-borne fuel oil and vacuum gasoil (VGO) in November, as per LSEG data and market sources.
Key Highlights
- Increase in Exports
- Russian fuel oil and VGO exports rose by 6% month-on-month in November, reaching approximately 4.26 million metric tons.
- Saudi Arabia as Primary Buyer
- Shipments to Saudi Arabia surged 29% from October, totaling 0.85 million tons, making it the top destination for these products.
- Other Major Buyers
- India: Imports from Russia fell by 5% to 0.47 million tons.
- China: Purchases decreased by 25%, totaling 0.32 million tons, amid concerns over potential tax reforms that could increase costs for imported oil products.
- Transit and Re-Routing
- Around 0.6 million tons of Russian fuel oil and VGO cargoes are currently en route to Singapore. These shipments might eventually reach China, as tankers often use Singapore as a waypoint, especially when navigating around the Cape of Good Hope rather than the Suez Canal.
Market Context
- Since the European Union’s embargo on Russian oil products in February 2023, Asian countries have become the primary buyers of Russian fuel oil and VGO.
- Both China and India use straight-run fuel oil and VGO as cost-effective alternatives to Urals crude for their refining operations.
Challenges in the Market
- China’s Tax Revamp: Anticipated changes in tax regulations for imported oil products are deterring some Chinese buyers.
- Global Dynamics: While Asia remains a key market, shipping patterns and alternative destinations, such as Singapore, underscore the complexity of global oil trade logistics.
Saudi Arabia’s growing import volumes highlight the evolving energy trade dynamics as Russia adapts to shifting market conditions following Western sanctions.
