Russia’s Transneft caps oil pipeline intake on brimming storage

(Reuters) – Russia’s Transneft, operator of the world’s largest oil pipeline network, has set caps on oil received by it as storage filled up amid weak demand for Russian fuel, hit by Western sanctions, five sources familiar with the matter said on Tuesday.

Russian oil exports are still flowing as sanctions imposed over the invasion of Ukraine, which Moscow calls a “special military operation”, do not directly target the energy trade.

However, difficulties with payments, insurance and shipping as well as curbs on dealing with several Russian oil suppliers forced many regular buyers to shun the market, leaving barrels unsold.

Transneft has told several Russian oil firms it would limit intake to its system amid high volumes of stored oil, which affect flexibility and threaten normal operations, said the sources, who spoke on condition of anonymity.

The curbs mostly cover oil that has yet to find buyers, while companies that have no difficulty selling cargoes would be allowed to supply all their oil to the system, said two of the sources.

All the sources declined to be identified because the matter is sensitive.

Transneft did not immediately reply to a Reuters request for comment.

More than a dozen cargoes of Urals oil from the March loading plan were cancelled, postponed or replaced amid weak demand, traders said, while Russian firms had to divert extra volumes for export, as domestic refinery runs declined.

Russian producers Surgutneftegaz and Zarubezhneft did not award spot tenders this month.

The Urals oil loading plan for April has been increased significantly, while nomination of cargoes for primary buyers was slow, traders said.

(Reporting by Reuters; Editing by Clarence Fernandez)