Russia's oil exports are experiencing a significant downturn, the most severe since early 2024, following the implementation of new U.S. sanctions. This situation is reshaping the global energy landscape, and it's something everyone should be aware of.
According to a November 4th report from Bloomberg, Russia's seaborne crude shipments saw a sharp decline in early November. This drop represents the largest weekly decrease since January 2024. The catalyst? Washington's October 22nd decision to impose sanctions on Rosneft and Lukoil, Russia's two largest oil companies. These sanctions freeze their U.S.-based assets and threaten secondary sanctions against any foreign entities trading with them.
The impact is clear: the four-week average volume from Russia's ports fell to 3.58 million barrels per day as of November 2nd. This is a decrease of 190,000 barrels from the period ending October 26th, marking the steepest decline in 22 months.
During the week ending November 2nd, only 26 tankers loaded 21.11 million barrels, a stark contrast to the 34 vessels that carried 26.41 million barrels the week before. On a daily average basis, exports plummeted to 3.02 million barrels, which is 20% below the previous week's 3.77 million.
But here's where it gets controversial... Much of the oil remains undelivered, with tankers now acting as floating storage facilities. Since early September, following the U.S. doubling 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. This is up from approximately 340 million barrels at the start of the year.
India, China, and Turkey, which collectively account for approximately 95% of Russia's crude exports, have either paused or reduced imports as they navigate the complexities of compliance. Some buyers are turning to smaller Russian suppliers not yet under sanctions, but many are seeking alternative sources.
Reliance Industries, India's largest private firm, has committed to adhering to U.S. sanctions and shifting to crude from the Middle East, the U.S., and Brazil. Indian Oil Corp, the country's biggest state-owned refiner, placed no Russian orders after 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 created a ripple effect, benefiting Western competitors.
According to Reuters, profits from refining operations among ExxonMobil, Chevron, Shell, and TotalEnergies rose 61% in the third quarter compared to the previous quarter, contributing to a 20% increase in overall earnings.
What about Europe?
In the coming weeks, the EU will decide whether to phase out its remaining Russian fossil fuel imports by early 2027 or give itself another year. Whichever deadline it sets, the bloc will face a difficult path to get there. It will have to overcome resistance from some capitals and secure new sources to replace the billions of 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.
And this is the part most people miss... The situation is complex, with multiple factors at play. The sanctions, the war, and the shifting global energy dynamics are all intertwined.
What do you think? Are these sanctions effective? Will they ultimately change the course of the war? Share your thoughts in the comments below!
