Key facts
- Approximately 135 million barrels of Russian crude oil are stranded at sea.
- Ukrainian airstrikes have reduced Russian domestic refining capacity by about one-third.
- Russia's refining capacity is at its lowest point since 2005.
- Moscow is increasing oil exports despite being below its OPEC+ quota.
- Export hubs are experiencing gridlock due to limited buyers of sanctioned Russian crude.
- Russia's oil revenues are declining despite high export volumes.
Russia is experiencing a significant bottleneck in its oil exports, with approximately 135 million barrels of crude oil stranded at sea. This situation stems from Ukraine's intensified drone campaign targeting Russian refineries, which has crippled about one-third of the country's domestic processing capacity, bringing it to its lowest level since 2005.
As a result, Moscow is compelled to divert more crude to international markets, even as its overall production in June was below its OPEC+ quota. However, major export hubs are facing substantial gridlock, with limited buyers for sanctioned Russian crude. Carloads of Sokol and Sakhalin Blend are experiencing week-long delays, and ESPO crude is accumulating near the Kozmino terminal. Shadow fleet tankers are gathering off the coasts of Egypt and Indonesia, many masking their destinations or sitting idle due to fears of secondary penalties.
Despite high export volumes, Russia's oil revenues are shrinking. This is attributed to a combination of lower global crude prices, widening discounts for Russian Urals, and delivery delays. While seaborne crude exports have reached their highest rate since early 2022, weekly revenues have fallen by about $200 million. China and India are major identified buyers, with Turkey and Syria also importing significant amounts. A substantial volume of crude is listed with unknown destinations, indicating undisclosed buyers and ongoing transit.