Urals slowly resumes heading east of Suez

Russian export blend crude is again heading east of Suez following a multi-month lull in sales to Asia-Pacific, but the amount heading that way is unlikely to return any time soon to levels seen in the first half of the year.

Trading firm Vitol loaded a 100,000t Baltic Urals cargo at Ust-Luga on the Aframax Gemini Sun yesterday, for Malaysia. It should arrive at Tanjung Pelepas early next month. And Urals will head east from the Black Sea later this month, according to fixture reports — trading firm Trafigura is down to load a 140,000t Surgutneftegaz cargo on 13-14 October, for China's Liaoning province on the Delta Spirit.

These cargoes will be the first Russian export blend to head east in months. Urals last left the Baltic Sea for Asia-Pacific in June, when Chinese state-controlled Sinopec's trading arm Unipec took a combined very large crude carrier (VLCC) to Qingdao's Huangdao terminal, Vortexa said. The most recent eastbound Black Sea Urals shipment left Sheskharis in May, according to Vortexa, also for China.

October-loading Urals could be generating interest from east of Suez because of improved arbitrage economics. Urals differentials to benchmark North Sea Dated are near their weakest since May. With Ice Brent crude futures at small discounts to Dubai swaps, Atlantic basin grades look moderately more competitive than Mideast Gulf crude to buyers in Asia-Pacific. Long-haul freight rates remain depressed.

But the latest shipments may not mean a return to the levels seen earlier in the year. Nearly 375,000 b/d of Urals loaded for Asia-Pacific destinations in the first half of the year, according to Vortexa. Most of that discharged at Chinese ports, and consisted of bulk shipments from northwest Europe rather than sporadic 100,000t cargoes.

Vitol's cargoes are headed to its own storage terminal, rather than to a regular Asia-Pacific Urals buyer. Tanjung Bin terminal operator ATT Tanjung Bin (ATB) is a subsidiary of Vitol's VTTI storage arm. Vitol took two 100,000t Ust-Luga Urals cargoes to the terminal in April, according to Argus tracking, which were the first shipments to Malaysia since at least 2017.

By Santiago Katz