Russia hunts for new naphtha markets as key buyers pull back

• Russian naphtha exports to Asia could drop to 600,000-800,000 tons in January-February, down about 30% from the monthly average of 1-1.2 million tons in the first 10 months of 2025
• Around 350,000 tons of naphtha loaded in December remain unsold or show Singapore as destination, with cargoes being re-exported through sites like Karimun, Indonesia, Brazil, and potentially African storage tanks
• The sanctions are expected to widen discounts on Russian barrels while increasing premiums on 'legitimate' non-sanctioned heavy full-range naphtha, with the U.S. resuming flows to Venezuela to replace the 100,000 tons per month Russia previously supplied

Russia Hunts for New Naphtha Markets as Key Buyers Pull Back

Key Developments:

Russia's naphtha exports to Asia are declining sharply due to U.S. sanctions on major producers Rosneft and Lukoil, forcing Moscow to seek alternative markets as key buyers retreat.

Key Figures:

• Russia's January Asia exports expected at 600,000 tons, down from 800,000 tons in December
• January-February Asian imports projected at 700,000-800,000 tons, approximately 30% below the 1-1.2 million ton monthly average from early 2025
• Russia typically exports 1.4-1.5 million tons monthly
• Around 350,000 tons loaded in December showing Singapore as destination; another 320,000+ tons with undeclared destinations
• Venezuela previously imported 100,000 tons monthly (June-December)

Market Impact:

Sanction risks are creating a two-tier pricing structure: premiums on "legitimate" non-sanctioned barrels are rising while discounts on Russian cargoes are widening. Heavy full-range naphtha, used for aromatics in gasoline blending and petrochemicals production, faces particular pressure.

Key Buyers Affected:

• Taiwan and India: Slashed imports in December following sanctions
• Venezuela: Halted Russian naphtha imports after Trump's mid-December blockade on sanctioned tankers; U.S. resuming supply but volume insufficient

Strategic Response:

Russian sellers increasingly using re-export hubs to obscure cargo origins, including Karimun terminal in Indonesia (50,000 tons/month), Brazil for Ust-Luga cargoes, and Singapore straits. Some cargoes remain unsold on water.

Supply Disruptions:

Tuapse refinery (150,000-200,000 tons monthly capacity) shut December 31 for repairs, requiring another month for normal production restoration. Taman port also closed for repairs following repeated incidents.