Russia Faces Growing Challenges in Oil Exports

Russia is facing growing difficulties not only in refining the oil it produces but also in selling it abroad. As demand weakens, loaded tankers are spending extended periods at sea waiting to unload their cargo.

Following strikes on its oil refineries, Moscow has attempted to maximize crude oil exports. However, the volume of shipments now exceeds market demand, according to Bloomberg.

The report says that during the four weeks ending July 12, Russia’s seaborne crude oil exports averaged 4.21 million barrels per day, remaining close to the highest levels recorded earlier this year.

That figure is only 10,000 barrels per day below the highest level seen since the start of Russia’s full-scale invasion of Ukraine. At that time, however, an additional 600,000 barrels per day were delivered by pipeline to European refineries.

According to Bloomberg, the surge in Russian crude exports is not being matched by sufficient buyer demand, leaving large volumes of oil stranded aboard tankers.

Analysts believe Ukrainian strikes on Russian refineries are forcing Moscow to export crude that can no longer be processed domestically. As a result, exports remain elevated even as oil production declines.

OPEC estimates that Russia produced 8.93 million barrels of oil per day in June, roughly 830,000 barrels per day below its production target under the producers’ agreement.

At the same time, Russian crude is taking much longer to reach buyers. Five tankers carrying Urals crude are currently anchored off Egypt’s Mediterranean coast, while another five are waiting near Indonesia’s Riau Archipelago, east of Singapore.

Cargoes of Sokol and Sakhalin Blend crude from Russia’s Far East are also waiting for weeks to be transferred from shuttle tankers to ocean-going vessels. Similar delays are affecting shipments of ESPO crude, with some tankers remaining idle for weeks near the Pacific port of Kozmino after loading.

According to Bloomberg, these delays have increased the total volume of Russian crude stored at sea to approximately 135 million barrels.