China and Saudi Arabia become the largest buyers of Russian fuel oil

As many Russian refineries completed planned maintenance, Russia increased its marine exports of fuel oil in July, sending much of the volume to China and Saudi Arabia, which were top buyers of the Russian oil product, Reuters reported on Friday, citing data from LSEG.

Total deliveries of fuel oil and vacuum diesel (VGO) from Russia rose 7 percent month-on-month in July to 4 million metric tons, according to data and trade sources who spoke to Reuters.

Of that 4 million tonnes, China and Saudi Arabia imported 700,000 tonnes each, with exports to China up 18% from June and exports to Saudi Arabia almost doubling in July from the previous month.

Saudi Arabia uses a lot of fuel oil to generate electricity during the hot summer months, when energy consumption peaks with increased demand for air conditioning.

Some of Russia’s exports of fuel oil and VGO by sea have seen ship-to-ship transfers and loading onto other vessels off the coasts of Malta and Greece, according to shipping data cited by Reuters. Most STS shipments are destined for Asia.

Russia has turned to Asia for seaborne exports of crude oil and petroleum products following EU and Western embargoes on Russian oil imports following Putin’s invasion of Ukraine.

As shipments of Russian crude oil and fuel to Asia increase, so does Russian fuel export volumes through 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.

As of late 2023, many ship owners and charterers have opted to use the longer route through Africa to avoid passage through the Red Sea, where the Iran-aligned Houthis have targeted Western Israeli-flagged and or owned ships.

Despite the fact that Russia is not targeted by the Houthis, many ships do not add another risk by taking the Red Sea route to Asia.

By Tsvetana Paraskova for Oilprice.com

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