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. Last Updated: 07/27/2016

Oil Flows To Estonia Resume

Russian Railways has unlocked all shipments of refined oil products to ports in Estonia after two weeks of disruptions amid a political dispute, traders said Thursday.

Up to 50,000 tons of light products and over 300,000 tons of fuel oil have been rerouted away from Estonia in May, trading sources in Russia, international trading firms and sources at Estonian terminals said.

"It is all running again," a source with a major operator on the route said.

"It should have happened, as it was obvious since the beginning that at the moment Russia cannot reroute such large volumes away from Estonia. There is simply no capacity in other ports," a source with a foreign oil major said.

Russian Railways said in early May that it would start repairs on the route to Estonia, but trading sources said the cut in refined products supplies was a Kremlin reaction to a dispute with Tallinn over a World War II monument.

Last month Estonia removed the statue of a Red Army soldier from Tallinn's center, sparking riots by some of the sizeable Russian minority in the Baltic state and angering Moscow.

Estonia's ports of Tallinn and Muuga are the transit points for around one-quarter of Russia's total refined products exports and are by far the biggest outlets, outweighing smaller terminals on the Russian Baltic and Black Sea coasts.

Shipments amount to 25 million tons per year, or from 390,000 to 480,000 tons per week, and traders said the flows had been almost fully halted in the first week of May, but started slowly getting back to normal last week.

"It was the most serious drop in the past 12 years, and there are no guarantees it won't happen again. The only guarantee we have is that Russia physically cannot reroute these volumes until it builds its own [ports]," a source at one of Estonia's biggest terminals said.

Russia has drastically cut transit shipments of oil via neighboring states, especially Latvia, Lithuania and Estonia in the past years, after President Vladimir Putin called on the government to stop subsidizing its neighbors with transit fees.