Russia’s seaborne crude oil exports reached a record high in October, while exports of petroleum products remained close to their lowest levels in recent years. This divergence is the result of operational disruptions from the war and the looming deadline of new US sanctions.
Crude Export Surge and Geopolitical Pressure
The sharp increase in crude exports was driven by Russian oil firms rerouting supply due to two main factors:
- Refining Disruption: Russian oil companies took domestic refining capacity offline after persistent Ukrainian drone attacks struck energy infrastructure, freeing up more crude oil for export.
- Pre-Sanction Rush: Buyers rushed to secure discounted barrels of Russian crude before the grace period for the latest US sanctions on Rosneft and Lukoil expired. This deadline caused a short-term spike in imports as buyers sought to fulfill existing contracts.
Buyer Caution and Congestion
Following the sanction announcement, caution spread among ports and buyers. The increased scrutiny led to congestion at receiving ports, with the number of ships waiting to discharge crude at Indian and Chinese ports roughly doubling the typical average. Major buyers—India, China, and Turkey—all recorded high purchase volumes during the month.
Low Petroleum Product Exports
Exports of petroleum products remained near the lowest level recorded since early 2022 due to domestic fuel instability.
- Refining Capacity Offline: Ukrainian drone strikes on refineries—some located far from the front line—have significantly reduced Russia’s total refining capacity, forcing the country to use crude for export instead of processing it into fuel.
- Export Restrictions: Moscow has attempted to stabilize domestic fuel supplies by extending its gasoline export ban and introducing a partial diesel export ban targeting small refineries and traders.
- Market Impact: The reduction in Russian fuel supply is considered a supportive factor for the global diesel market, which remains preoccupied with potential distillate shortages.
Analysts suggest that while the sanctions are unlikely to cause a massive direct decline in Russian refined product exports, they will likely lead to further market reshuffling and discounting of these volumes.
Did you subscribe to our daily Newsletter?
It’s Free Click here to Subscribe!
Source: S&P Global
