Russia's Seaborne Oil Exports Plunge Amid US Sanctions and Ukraine's Strikes
Russia's seaborne crude oil exports experienced a sharp decline in early November, marking the largest weekly drop since January 2024, according to Bloomberg's November 4 report. This downturn follows the US's decision on October 22 to impose blocking sanctions on Rosneft and Lukoil, Russia's two largest oil companies, freezing their US-based assets and threatening secondary sanctions against foreign entities trading with them.
The four-week average volume from Russia's ports fell to 3.58 million barrels per day as of November 2, a 190,000 barrel decrease from the previous four-week period. During the week ending November 2, 26 tankers loaded 21.11 million barrels, compared to 34 vessels carrying 26.41 million barrels a week earlier, resulting in a 20% drop in daily exports to 3.02 million barrels.
The oil industry is adapting to these changes, with tankers now serving as floating storage facilities for undelivered oil. Since early September, after the US doubled tariffs on India, the amount of Russian oil stored at sea has grown by 8% to over 380 million barrels, equivalent to over 100 days of exports. At the start of the year, around 340 million barrels were held in tankers.
India, China, and Turkey, which account for 95% of Russia's crude exports, have paused or reduced imports as they navigate compliance risks. Some buyers have turned to smaller Russian suppliers not yet under sanctions, but many are sourcing oil elsewhere. India's largest private firm, Reliance Industries, has shifted to crude from the Middle East, the US, and Brazil, while Indian Oil Corp, the country's biggest state-owned refiner, has placed no Russian orders since the sanctions took effect.
The sanctions coincide with Ukraine's intensified strikes on Russian oil infrastructure, further reducing output and exports. This combined impact has benefited Western competitors, with profits from refining operations among ExxonMobil, Chevron, Shell, and TotalEnergies rising 61% in the third quarter compared to the previous quarter, contributing to a 20% increase in overall earnings.
As Europe plans to phase out Russian oil and gas, the EU faces a challenging path. The bloc must overcome resistance from some capitals and secure new sources to replace the billion euros' worth of Russian oil and gas still flowing to the EU each month. The EU has made substantial progress in reducing its long-standing reliance on Russian energy since the start of the year.
