CPC Blend at centre of 2025 market challenges
In this overview of crude oil exports from Kazakhstan, we highlight the most significant developments that have impacted the trade so far this year, with a specific focus on the country’s dominant export, CPC Blend.
In February CPC Blend exports increased significantly, introducing new barrels to the market heading East, growing Pacific Basin-bound departures sixfold y-o-y to more than 474kbd.
That said, we do not expect these elevated levels to continue—in the larger context of potentially increasing production from OPEC+, among other factors — with most Kazakh barrels likely to stay in Europe and the nation’s seaborne export levels potentially declining to below 1.6 mbd from May onwards.
Large changes in CPC export dynamics
Since January 2025, a series of developments have animated the seaborne crude export dynamics of Kazakhstan and its major crude blend, CPC. We can separate these into four categories, impacting both the country, its OPEC partners, and returning buyers of the grade, such as China and South Korea:
- The completion of the expansion project at Tengiz oil field, the largest field in Kazakhstan
- The introduction of new sanctions by the US, UK, and the EU against Russia & Iran in January and throughout 2025, prompting increased crude buying from the Pacific Basin
- The targeting of crude infrastructure transporting CPC to Russian ports
- Kazakhstan’s persistent conflict with OPEC+ as it relates to their non-compliance with their production quota.
New supplies are shifted to the East
The recent expansion project completed at Tengiz oil field in late January was the first major domestic development this year that significantly shifted the export dynamics of Kazakhstan’s most significant crude grade. The project enabled the country to export over 1.6mbd of seaborne CPC Blend crude in February, compared to 1.2mbd and 1.4mbd in December 2024 and January 2025, respectively, representing a 290kbd increase y-o-y. These new supplies pressured CPC price differentials, with prices falling from around -$1/b vs Dated to below -$3/b (cif Augusta, Argus).
The sanctions introduced by the outgoing Biden Administration in mid-January of this year, primarily targeting the Russian oil trade, sent shockwaves throughout energy markets. In response to the uncertainty, Asian buyers increased their purchasing of crude oil, in case Russian and Iranian barrels were to become less readily available. Crude arrivals to China and India combined passed the 17.4mbd mark in March and stayed high in April as well, being up 390kbd and 480kbd y-o-y, respectively.
The eastward swing in crude exports also drew in the newly available Kazakh barrels, raising seaborne Pacific Basin-bound CPC blend exports from January to February by over 310kbd; this level has persisted until the end of April. This means that, until May, largely all additional CPC exports versus previous months have been going East.
Will CPC flows to the Pacific Basin hold?
When taking a long-term view, the increase in CPC exports to the Pacific Basin represents a sharp trend reversal and is unlikely to persist for a number of reasons.
Before October 2023, eastward exports were quite significant, around the 400kbd mark, loaded from Novorossiysk and travelling through the Suez Canal. However, following the commencement of attacks in the Red Sea and the subsequent forced re-routing of vessels around the Cape of Good Hope, the number of barrels going East dropped precipitously; October 2024 exports to the Pacific Basin were down 81% y-o-y. Only India remained a consistent buyer of CPC. This pattern of reduced buying was swiftly reversed this year.
The draw to the East was further aided by refinery maintenance season, especially poor crude demand in Europe and relatively high Middle East prices. From January to late-February the Brent-Dubai EFS dropped close to parity, making Brent-priced Atlantic Basin barrels more attractive to Asia Pacific refiners.
However, as Russian and Iranian barrels remain available to the market, as more supply from the Middle East is expected to be exported, and as traders continue to avoid the Red Sea route, it is likely that the vast majority of CPC supply will remain within Europe going forward, especially as some European demand returns post-maintenance.
Geopolitical pressure builds on CPC blend exports
As Kazakhstan’s crude exports have grown, its infrastructure was put under persistent pressure. Issues at pumping stations and at various points of the CPC pipeline – which Russia attributed to Ukrainian drone strikes – forced the re-routing of pipeline flows. An oil spill last December in the Kerch Strait also triggered an investigation by Rostransnadzor (Russia’s transport supervision agency), which shut down two out of three moorings at the CPC Marine Terminal in Novorossiysk. Infrastructure and regulatory issues are further exacerbated by Kazakhstan’s ongoing conflict with the wider OPEC+ group, as they remain the largest overproducer within the bloc. Whilst Iraq seems to curtain their non-compliance, Kazakhstan has insisted that limiting production remains difficult following the large investments made in its extraction infrastructure by Western supermajors, led by Chevron. The government has also stated that limiting production would go against the national interest (Argus). It remains to be seen whether OPEC+ will place increasing pressure on Kazakhstan to comply, whether Russia will intervene further, or whether further infrastructure hiccups materialise.
As it stands, OPEC+ has demonstrated a willingness to raise output despite weak fundamentals. It is also unlikely that the West to East economy of CPC exports will hold, with barrels staying in the Atlantic Basin. Consequently, it is likely that going forward most exports will go to Europe, and it is now plausible that Kazakhstan will keep exports below the 1.6mbd level from May onwards and reduce production, given increasing pressure by OPEC+.
