Sanctions are forcing Russian oil to stay at sea longer while Moscow and its buyers seek new delivery schemes.
Points of attention
- In total, more than 185 million barrels of Russian oil have accumulated on tankers.
- The price of Russian oil is falling faster than on world markets.
Tankers with Russian oil “stuck” at sea
Russian oil exports have reached their highest level in more than two and a half years. However, more and more of the crude is not reaching buyers and is accumulating on tankers parked off the coasts of India and China.
The volume of Russian oil remaining at sea has increased by almost 50% since late August. Despite record exports, at least 20 tankers carrying Russian oil are waiting for permission to dock in Chinese and Indian ports, while others have spent months delivering their cargoes.
In total, more than 185 million barrels of Russian oil have accumulated on tankers. According to Bloomberg estimates, Russia shipped 3.87 million barrels per day in the four weeks to December 21. This increase is explained by the resumption of shipments from the Baltic Russian port of Primorsk.
The additional export volumes have been partly due to reduced domestic refining. Refinery operations remain below seasonal levels due to attacks by Ukrainian drones. One of these strikes damaged a plant in Yaroslavl, which is considered one of the largest fuel producers in Russia.
The difficulties for Moscow have also been compounded by falling prices. The cost of Russian oil is falling faster than on world markets. The need to provide deep discounts has pushed Urals crude down by about $25 a barrel, or about 40% from its peak in mid-July, and prices themselves have fallen to $34 a barrel.
The build-up of Russian oil at sea coincides with increased U.S. action against tankers carrying sanctioned crude from Venezuela, a move that could raise concerns among shippers and buyers of Russian oil who fear their cargoes could also be targeted.
Although Russian crude oil supplies to China and India are formally declining, this is offset by the growth in oil on ships without a specified final destination. There is now more such "unaddressed" oil at sea than on tankers bound for China, India or Turkey combined.
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