Summary

• In September 2023 Russian oil export revenues increased by $1.8 bn (MoM) to the highest level since July 2022 on both higher prices and higher exports volumes of crude and oil products.

• Russia managed to significantly decrease its reliance on Western maritime services: in Q3 2023 only 42% of Russian seaborne oil exports was shipped by tankers with P&I Club insurance compared to 54% in Q2 2023. In addition, the P&I Club coverage varies by ports: 80% of crude oil exports from Black Sea ports were shipped with P&I Club insurance while only 9% of crude oil shipments from Pacific Ocean ports had P&I Club insurance in September 2023.

• The KSE Institute estimates 178 loaded Russian shadow fleet tankers left Russian in August 2023, 72% of which were built more than 15 years ago. Operation of Russian shadow fleet poses huge environmental risks for the EU as decrepit tankers older than 15 years without P&I insurance navigate several European countries coastlines including Danish Straits.1. In September 2023, the shadow fleet was responsible for exports of around 2.2 mb/d of crude oil and 0.8 mb/d of oil products.

• The number of unique shadow fleet tankers carrying crude and oil products from Russian ports in July – September 2023 is estimated at 336. 

• However, the KSE Institute believes the actual shadow fleet tankers operated by Russia is much lower as only 208 shadow tankers returned to Russia ports for a second loading during 100 days since March while the need in tankers for stable exports was around 3-4 times higher during last several months.

• Russian oil companies hide their connections to shadow fleet operations by dispersing ship managers as KSE Institute found twelve of them operate just one tanker but have the same registration address in Liberia and are managed by the same information security manager (ISM) registered in India. 

• Narrowing but still significant price discounts for both Russian crude and oil products continue supporting the strong demand for Russian oil exports. In September 2023, average Urals FOB Baltic and Black Sea increased to $80/bbl and $81/bbl despite being ineligible for shipping with P&I insurance at such price. In December 2022-September 2023 ESPO was shipped with Western maritime services at prices much above the price cap. Diesel, gasoil, fuel oil and naphtha were traded above the price cap as well. Crossing the approved price cap by most important items of Russian oil exports as crude, diesel and fuel oil indicates weak policy enforcement by the EU/G7 governments.

• Russian oil export revenues increased by $1.8 bn to $18.8 bn in September (MoM) due to both higher crude and products volumes exports and higher prices and were the highest since July 2022. According to the KSE Institute estimates, in the base case with current oil price caps and status quo of sanctions but their stronger enforcement, revenues will contract to $177 bn and $157 bn in 2023 and 2024 respectively compared to $218 bn in 2022. If the price cap is lowered to US$ 50/bbl discount to forecast Brent prices, revenues fall to $160 bn and $74 bn in 2023 and 2024. However, in case of weak sanctions enforcement, Russian oil revenues could approach a robust $184 bn and $202 bn in 2023 and 2024 respectively.