India and China emerged as the top destinations for Russian seaborne fuel oil and vacuum gasoil (VGO) exports in May.
Traders and data from LSEG indicated a significant increase in these exports, reflecting shifts in global trade patterns following the European Union’s embargo on Russian oil products.
Surge in Russian fuel oil and VGO exports
Russian fuel oil and VGO seaborne exports saw a notable rise of 12% from April, reaching approximately 4 million metric tons in May.
This increase was partly due to the completion of seasonal maintenance, which allowed for higher production and export volumes.
The EU’s full embargo on Russian oil products, effective from February 2023, redirected the bulk of Russia’s fuel oil and VGO to Asian markets, predominantly India and China.
Increased shipments to India and China
In May, direct shipments of fuel oil and VGO from Russian ports to India increased to 0.7 million tons, up from 0.6 million tons in April.
Russian fuel oil loadings to China rose to about 520,000 tons, compared to 450,000 tons in the previous month, according to Reuters calculations and LSEG data.
These figures underscore the growing dependence of India and China on Russian oil products for their refining needs.
Strategic import choices by India and China
Both India and China import straight-run fuel oil and VGO for refining purposes, which helps to partially replace the more expensive Urals barrels. This strategic shift allows these countries to manage their refining costs more effectively while ensuring a steady supply of necessary oil products.
The redirection of Russian oil exports to Asia highlights the changing dynamics in the global energy market, driven by geopolitical shifts and economic considerations.
The increase in Russian fuel oil and VGO exports to India and China in May reflects the broader impact of the EU embargo and the resulting reconfiguration of global oil trade routes.
As these Asian giants continue to adjust their import strategies, the global oil market is likely to see further shifts in trade patterns and supply chains.
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