Russia Cuts Oil Exports

Exports of Russian raw material fell to the lowest level since February. In the meantime, internal refining is growing.

In the first ten days of July, Russian oil exports fell by more than a million barrels per day. On average, over the specified period, Moscow sold abroad 2.8 to 2.9 million barrels per day, i.e. the minimum volume recorded since February. This fall has primarily hit Indian importers and a number of other Asian countries. The data was published by Bloomberg, which in turn cited sources from the Global Ship Tracking Intelligence.

The cut that the Kremlin was forced to apply to its international oil trade has been, to a small extent, with the restrictive measures of OPEC+, which is trying to slow down the price fall. Saudi Arabia has decided to reduce its own oil production in the period of July-August 2023 by one million barrels per day. Russia will cut its production by 500,000 barrels per day for the entire month of August.

But the main reason for the sharp decline in Russian oil exports has to do with very low availability of oil carriers, after Indian shipowner Gatik Ship Management, headquartered in Mumbai, was accused of violating Western sanctions and thus lost the ability to insure its own tanker ships. For a long time, Gatic was the main company for the sea transportation of Russian crude oil. In April, Gatic operated 42 tankers; in early July this number fell to just four tanker ships. Recently, Mumbai society has virtually “disappeared from the radar,” while its fleet is being transferred under some unspecified new management.

In 2022, the G7 mandated a ban on insurance coverage and financing for deliveries of Russian-origin crude oil and petroleum products, unless they are sold at prices that meet a pre-set ceiling, which is currently $60 per barrel. 90% of the global oil transport insurance business is in the hands of companies from the G7 countries. Brussels accused Gatic of systematically violating the price ceiling set for the export of Russian crude oil. In the past, competent Western sources have estimated the value of the “shadow” Russian oil fleet at $2.2 billion.

Following the imposition of restrictive Western sanctions on Russian oil exports, Moscow stopped systematically publishing data on both production and exports of crude oil. In parallel with the drop in sales abroad, Russian domestic production of gasoline and diesel has increased and, in the first five months of 2023 (latest data available – ed.), has grown by 5.3% and 7.8% compared to the same period in 2022.