Increasing volumes of Russian oil products are appear to be landing in Saudi Arabia by way of Egypt, Bloomberg reported.
While Egypt exported fuels to Saudi Arabia before Russia invaded Ukraine, Saudi Arabia is now taking 3.2 million barrels of power station fuel from Egypt this month, according to data from Vortexa cited by Bloomberg, marking a six-year high. Meanwhile, Egypt’s imports of the fuel from Russia are soaring to 1.8 million barrels, the highest since at least 2016.
“It appears that increasing volumes of Russian fuel oil are making their way to Saudi Arabia via Egypt,” Jonathan Leitch, an oil market analyst at Turner, Mason & Co., told Bloomberg.
The increased exports come as Saudi Arabia typically ramps up its appetite for fuel over the summer as scorching temperatures drive up energy demand.
Russian barrels first travel to Egypt’s Ain Sukhna terminal in the Red Sea, where Aramco Trading has ample storage, before being shipped to western ports in Saudi territory. Saudi and Egyptian officials declined to comment to Bloomberg.
While the US has imposed an embargo on Russian oil and the EU is phasing in a partial ban, there are no direct sanctions that would stop Egypt from importing, then selling, Russian oil products to neighboring countries.
But the move helps Russia bypass efforts to choke off its revenue from energy exports, which have already found eager buyers in China and India.
“Saudi Arabia has indeed been ramping up imports of Russian fuel oils as there are no sanctions preventing this from happening,” Peter La Cour, an oil analyst at Energy Aspects, told Bloomberg. “Russian fuel oil is the cheapest barrel available to fuel Saudi summer power generation demand and makes economic sense.”