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A staggering buildup of nearly one billion barrels of oil floating at sea includes a surprisingly large portion from countries facing sanctions. Vessel-tracking data from Vortexa, Kpler, and OilX reveals that between 20% and 40% of the increase since late August can be traced back to Russia, Iran, Venezuela, or barrels of uncertain origin, far exceeding their combined share of global production. While these barrels will eventually find buyers, this accumulation poses a threat to the revenues of sanctioned oil exporters and injects uncertainty into a market that’s expected to tip into oversupply. The increase is a result of both heightened output and the growing challenges of unloading certain shipments due to tightening restrictions from the West, reports gCaptain.
Global Market Faces Ripple Effects From Sanctions
The latest measures from Western governments are causing a shift in crude oil flows. Major importers like India and China are changing their buying habits, and the tightness in the freight market has briefly pushed tanker earnings above $100,000 per day.
Clarksons Securities noted: “Some of this increase is attributed to stricter Western sanctions, which have left Russian oil stuck on ships and unable to discharge. Previous buyers have purchased replacements from the Middle East and the Atlantic.”
Russian Supplies Lead the Rise in Restricted Oil at Sea
In recent weeks, Russian seaborne exports have surged as the country rolls back OPEC+ production cuts and reroutes crude following attacks on refineries in Ukraine. However, stricter enforcement of sanctions is making it difficult for some shipments to be unloaded.
Indian refiners have been hesitant to accept several cargoes, and early signs indicate that China may not step in to fill the void. Additional U.S. measures targeting Rosneft and Lukoil have further complicated the trading landscape. Last month, Russia’s oil-related tax income plummeted by more than 24% compared to the previous year, with government forecasts showing that oil and gas revenues are at their lowest since 2020.
Iranian Exports Surge Despite New Sanctions
In October, Iranian shipments hit a seven-year high, even as new US sanctions targeted a major Chinese terminal that handles Iranian crude. According to OilX, their oil-on-water data reflects confirmed volumes from both Iran and Venezuela, although these figures might actually be higher due to the usual delays seen in dark-fleet operations. On the other hand, Vortexa often revises its numbers downward after ships unload, but analysts point out that “the current situation is anything but normal.”
Non-Sanctioned Producers Also Increase Volumes at Sea
At the same time, non-sanctioned exporters are also ramping up their shipments. OilX’s data shows that Saudi Arabia is the biggest player in the global oil-on-water increase, followed closely by the United States and Russia. Saudi exports have reached their highest levels in 2.5 years, as the kingdom works to reclaim market share after prolonged OPEC+ cuts. Meanwhile, US crude at sea has surged following near-record export levels in October, thanks to strong demand from Asia during a favorable arbitrage window. Despite all this, the barrels from sanctioned countries still make up a surprisingly large portion of the recent increase, considering they account for only about 17% of global output.
Growing Uncertainty Over the Identity and Destination of Barrels at Sea
Market participants remain alert to the implications of the rising oil-on-water trend. As Phillips 66 executive Brian Mandell said during an earnings call: “It’s clear that there is a lot of crude on the water now. We’re kind of waiting to see what those crudes are.”
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Source: gCaptain
