Russia’s crude oil shipments have surged to their highest levels in three months, a development linked to the country’s refineries embarking on seasonal maintenance. This rise in exports highlights the resilience of Russia’s oil industry despite production cuts and international sanctions. However, the oil market’s complex dynamics, including fluctuations in global prices and geopolitical tensions, continue to shape the nation’s crude export landscape.
In the week leading up to October 6, Russia’s four-week average crude oil shipments rose by 60,000 barrels per day, reaching a high of 3.32 million barrels daily. This marked the highest level since early July. The increase in shipments comes at a time when refinery maintenance has reduced oil processing across the country, allowing more crude to be allocated for export.
The country’s oil processing during most of September dropped to the lowest levels since June, as refineries across the nation underwent scheduled maintenance. This trend continued into early October, reducing the domestic consumption of crude oil and enabling an increase in exports. While refinery operations were down, Russia managed to capitalize on this temporary dip in processing by boosting its seaborne crude shipments.
Interestingly, this increase in four-week average shipments occurred despite a drop in exports from Russia’s key ports in the Baltic and Asia. Over the seven-day period leading up to October 6, overall crude oil production and shipments decreased. A total of 31 tankers carried 23.58 million barrels of Russian crude, a significant reduction from the 26.17 million barrels transported by 35 ships the previous week. This drop represented a decline of approximately 370,000 barrels per day, bringing Russia’s daily crude flows down to 3.37 million barrels.
Despite the weekly drop in volumes, the less volatile four-week average showed an upward trend, indicating a gradual and sustained recovery in Russia’s crude exports. The four-week average increased from 3.26 million barrels per day in the previous week to 3.32 million barrels, underscoring the resilience of Russia’s oil export system.
A notable addition to Russia’s seaborne exports during this period was the inclusion of Kazakhstan’s KEBCO crude oil. Two KEBCO cargoes were loaded at Novorossiysk, a key port on the Black Sea, and another cargo was loaded at Ust-Luga on the Baltic Sea. While these shipments do not represent a significant volume relative to Russia’s overall crude exports, they contribute to the country’s export portfolio and help offset some of the recent declines in domestic production.
Russia’s crude production dipped below its OPEC+ target in September, a development that highlights the country’s ongoing efforts to balance its domestic energy needs with its commitments to the international oil market. Moscow reported that it pumped 8.97 million barrels per day in September, a figure that is marginally below its OPEC+ target of 8.978 million barrels per day.
This slight underproduction follows Russia’s agreement with OPEC+ to implement deeper production cuts as part of a compensation mechanism for exceeding its production targets earlier in the year. The current production target is in place until the end of November, following a decision by the OPEC+ group to delay the planned easing of output cuts by two months.
Moscow has pledged to make even deeper cuts in October and November, with further reductions planned between March and September of 2025. This commitment is designed to maintain stability in the global oil market, particularly in light of rising geopolitical risks and the need for greater adherence to OPEC+ agreements.
While Russia’s crude shipments have increased in volume, the value of these exports has experienced a decline. The gross value of Russia’s crude exports fell to $1.54 billion in the seven days to October 6, down from $1.68 billion in the previous week. This drop in revenue reflects a combination of factors, including reduced shipment volumes and fluctuations in global oil prices.
However, the decline in weekly export revenues was partly offset by an increase in the average price of Russia’s crude oil. A rise in global benchmarks, driven by market concerns over the escalating conflict between Iran and Israel, has pushed up the price of Russian crude. As tensions in the Middle East continue to grow, there is increased uncertainty surrounding oil supplies from the region, leading to upward pressure on global oil prices.
The price increases for Russian crude were not uniform across all export routes. In the Baltic region, export prices rose by approximately $1.50 per barrel compared to the previous week. Similarly, crude shipments from Russia’s Black Sea ports saw a price increase of about $2 per barrel. Meanwhile, prices for Russia’s key Pacific-grade crude, known as ESPO, increased by $1 per barrel.
India, one of Russia’s largest crude oil importers, also experienced higher delivered prices. The average price of Russian crude delivered to India rose by about $2.10 per barrel. These price gains helped to mitigate some of the losses from lower shipment volumes, ensuring that Russia’s crude export revenues did not experience a sharper decline.
Oil remains a crucial source of revenue for the Russian state, particularly as the country continues to navigate Western sanctions and finance its military operations in Ukraine. In September, the Russian government reported a modest increase in its oil revenues on an annual basis, despite the broader decline in global energy prices. However, this increase came at a cost to the country’s oil producers.
In response to weaker global energy prices, the Kremlin decided to reduce monthly subsidies to domestic crude producers by half. These subsidies had previously been introduced to shield oil companies from the impact of lower prices, but the government’s need for revenue to fund its ongoing military activities has prompted a shift in policy. By cutting subsidies, the Russian state is able to maintain its revenue levels, albeit at the expense of oil producers who now bear a greater share of the financial burden.
Russia’s oil export strategy is unfolding against a backdrop of heightened geopolitical uncertainty, particularly in the Middle East. The deepening conflict between Israel and Iran, including recent missile attacks, has raised concerns about potential disruptions to oil supplies from the region. This uncertainty has driven up global oil prices, with traders and analysts closely watching developments in the region for signs of further escalation.
For Russia, the rising tensions in the Middle East present both challenges and opportunities. On the one hand, higher global oil prices could bolster the value of Russia’s crude exports, helping to offset some of the recent declines in shipment volumes. On the other hand, the potential for supply disruptions in the Middle East could lead to increased volatility in global oil markets, complicating Russia’s efforts to maintain stable production and export levels.
As Russia continues to navigate the complexities of the global oil market, its strategy of balancing domestic production with export demands will be critical. The country’s commitment to deeper production cuts in the coming months reflects its desire to align with OPEC+ and maintain stability in the global market. However, with geopolitical risks on the rise and sanctions still in place, the future of Russia’s oil exports remains uncertain.
In the near term, the country’s ability to sustain its current export levels will depend on the outcome of ongoing refinery maintenance and its adherence to OPEC+ production targets. As the global oil market continues to evolve, Russia’s role as a major crude exporter will be shaped by both domestic factors and the broader geopolitical landscape.
Russia’s crude shipments have demonstrated resilience in recent months, with the country managing to increase its exports even as production dips and international pressures mount. As the world watches developments in the Middle East and the global oil market, Russia’s oil industry will remain a key player in shaping the future of global energy supplies.
