Photo: EPA
As much as 143 million barrels of unsold Russian crude are currently stuck at sea, while Moscow is losing billions of dollars every month as its oil industry sinks deeper into crisis under U.S. sanctions, Bloomberg reports.
According to people familiar with the matter, Russia’s oil output fell for the second consecutive month in January, dropping by nearly 300,000 barrels per day below the level allowed under the OPEC+ agreement. At current oil prices, this amounts to losses of about $9 million per day.
Bloomberg estimates that Russia produced an average of 9.28 million barrels of crude per day in January, excluding gas condensate — about 46,000 barrels per day less than in December, when output had already declined. The drop is driven by mounting difficulties in selling Russian oil amid U.S. pressure on key buyers.
India shifts toward the U.S.
A major blow to Russian oil exports followed U.S. President Donald Trump’s decision in early February to lift an additional 25% tariff on Indian goods in exchange for New Delhi curbing purchases of Russian crude. While India has not publicly detailed the oil-related terms of the deal, its impact was immediate: almost all state-owned and private Indian refiners halted spot purchases of Russian oil.
India had been one of Russia’s two largest crude buyers since the start of the full-scale invasion of Ukraine, making the loss of this market a serious setback for the Kremlin.
Crude piling up at sea
With buyers scarce, Russian oil is accumulating on tankers at sea. By early February, the volume of crude stored on vessels reached 143 million barrels — nearly double the level a year earlier and about 25% higher than at the end of November. Tankers carrying sanctioned Russian oil have been roaming the seas for weeks in search of buyers, with the situation continuing to deteriorate.
Some shipments are now being redirected to China, Russia’s second key buyer after India. However, analysts doubt that the Chinese market can absorb all the additional volumes rejected by Indian refiners. While China already purchases large quantities of discounted Russian crude, its domestic demand has limits.
Budget risks for the Kremlin
The production slump poses direct risks to Russia’s budget. Last year, oil and gas revenues accounted for roughly 23% of government income. In January, energy revenues fell to a five-year low amid weaker global prices, deeper discounts on Russian crude and a stronger ruble.
If output continues to decline, Russia also risks losing global market share to its OPEC+ partners. The cartel has agreed to keep production stable through the first quarter of 2026, but has yet to announce a strategy beyond March.
Last week, Russian Deputy Prime Minister Alexander Novak said OPEC+ expects global oil demand to rise from March or April. His remarks are notable given that Moscow has recently advocated caution within OPEC+ over increasing production in order to keep prices elevated.
Bloomberg notes that Russian officials and business leaders fear Moscow is running out of time to secure a peace deal before economic conditions deteriorate further. Any future European ban on Russian seaborne oil shipments or seizures of “shadow fleet” tankers would pose “serious threats” to the Kremlin.
