“Since the European Union sanctioned Russian oil exports in 2022, crude oil and dirty and clean petroleum products (CPP) have found new buyers. India and China have taken most of the crude oil and dirty products while Türkiye and Brazil have emerged as the main buyers of CPP. Year-to-date, Brazil’s import of Russian CPP has increased by 135% year-on-year,” says Niels Rasmussen, Chief Shipping Analyst at BIMCO.Historically, the US has been the main supplier of CPP to Brazil, accounting for about 50% of all Brazilian CPP imports. Since April 2023, Russia has been the main supplier and volumes from the US have declined by nearly 50% so far this year compared to the same period last year. Instead, US exports to Europe have increased.

“Following the implementation of EU sanctions, Brazilian CPP imports from Russia increased during the first months of 2023, reaching an average of nearly 650,000 tonnes during the last eight months of the year. In 2024, average monthly volumes have risen further to 830,000 tonnes during the first four months,” says Rasmussen.

Year to date, Russia has supplied 50% of all Brazilian CPP imports and the US has supplied 13%. A total of 16% of all Russian CPP exports have been shipped to Brazil which has emerged as the second largest importer of Russian CPP after Türkiye with imports of 29%.

Perhaps surprisingly, the shift in suppliers has not resulted in any major change in the ship sizes that carry Brazil’s CPP imports. MRs and LR2s still account for nearly 90% of all volumes discharged in Brazil.

All sectors have benefitted from the longer sailing distances from Russia to Brazil. In fact, tonne miles for Brazil’s CPP imports have year-to-date increased 6% over last year despite a 3% fall in volumes, as the average sailing distance is up 9%. The shift of US exports away from Brazil and towards Europe has not had much of an impact on sailing distances.

The change in Brazil’s buying patterns has contributed to a 3% increase in average sailing distances for global CPP volumes from 2022 to 2023. The additional 4% increase so far in 2024 can mainly be attributed to the crisis in the Red Sea.

“There is no indication that Brazil will reduce its imports from Russia but, volumes may still decline. Russian refineries have recently been hit by Ukrainian attacks and as a result Russia’s total CPP exports in April appear to have halved compared to previous months,” says Rasmussen.

Source: BIMCO